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5 - 6 December 2023, Wellington #integritasza – Coalition-Conference 2023 with the theme Coalition Governance in South Africa: Dedicated Desired State or Destructive Disasters, was held on 5 and 6 December 2023 at the Andrew Murray Centre of Spirituality, in Wellington.  The conference aimed to explore the challenges and opportunities of South African coalition governance, in the context of the 2024 South African national and provincial government elections. Daryl Swanepoel, Stephen Langtry, Edwin Mc Queen and Berenice Marks represented the Inclusive Society Institute at the conference.  Daryl Swanepoel, CEO of the Inclusive Society Institute was one of the keynote speakers. There were many esteemed speakers, amongst others, Prof Jaap de Visser from the Dullah Omar Institute, Dr Heather Thuynsma from the Pretoria University, Dr Harlan Cloete, from the University of Free State as well as Mr China Dodovu, Chair of the CoGTA and he serves the ANC NCOP, Pieter Groenewald, National Leader of the Freedom Front Plus and Mark Willemse, a previous Mayor of the Knysna Municipality. The themes were, problem identification and co-creation of solutions for coalitions as desired futures. Prof Erwin Schwella, who hosted the event, was extremely satisfied with the robust debate and the input of the various speakers.

The Portfolio Committee on Home Affairs and the Select Committee on Security and Justice held Public Hearings on the Electoral Matters Amendment Bill [B42 – 2023] on Tuesday, 6 February 2024. Daryl Swanepoel, CEO of Inclusive Society Institute did a 10-minute submission. Click here to view the presentation Click here to view the submission YouTube recording below (Timestamp: 1:39:03)

Copyright © 2024 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute. DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. February 2024 Author: Olivia Main Editor: Daryl Swanepoel This report has been enabled through the generous support of the Embassy of Finland in Pretoria, South Africa Content Chapter 1: Setting the scene Introductory remarks by Ambassador Anne Lammila, Finnish Ambassador to South Africa Presentation by Daryl Swanepoel, CEO of the ISI, on the Institute’s latest poll on electoral support in South Africa Chapter 2: Input by Panellists Jenni Karimäki Professor Liisa Laakso Virva Viljanen Chapter 3: Discussion Chapter 4: Summary of Lessons to be learnt and gained from the Finnish Model Cover photo: istockphoto.com – Stock illustration ID: 1852275835 Chapter 1 Setting the scene Coalitions is a hot topic in South Africa. With general elections looming in 2024, the ruling party’s power and support is ebbing, largely due to corruption and loadshedding. On the other hand, the opposition is gaining increasing support. It appears that the country is heading in the direction of a coalition government. In fact, a number of opposition political parties have already come together to sign the Multi-Party Charter 2024 – a landmark pre-election coalition agreement to share power if they cumulatively beat the ANC in the polls. But some analysts have suggested that South Africa is not yet prepared for a coalition government. Its legislation is not ready, and it simply does not have that culture in place, with the parties’ tendencies towards stubbornly pushing party agendas and using bullying tactics in government negotiations. And with so many people still casting votes based on tradition, history and loyalty, rather than on the basis of informed, rational decisions. Also, polling in South Africa is often unreliable, which means much will come down to voter turnout. The bottom line is, trying to build democratic coalitions without the right attitude and political education is foolhardy and will not lead to stability. In light of this, the Inclusive Society Institute (ISI), in conjunction with the Finnish Embassy in South Africa, hosted a high-level webinar on 8 October 2023 on lessons South Africa can draw from the Finnish experience on coalitions. Three expert panellists were invited to share their knowledge on the topic: Jenni Karimäki, University of Turku in Finland; Professor Liisa Laakso, Nordic Africa Institute; and Virva Viljanen, Demo Finland. A key insight from the Finnish experience is that coalition governments are both a result and precondition of inclusive political systems and inclusive political institutions – which feeds the stability and legitimacy of the democratic system. In order to form a coalition government, and especially a majority coalition, a number of parties are required to cooperate. Even though it is a case of, the bigger the party, the more ministers and the more say they have in the government programme, it is still a negotiation, a coalition, and therefore, nobody gets all the power. And the discussions taking place within spending limits means parties cannot come with outrageous promises, they have to work within that framework. The Finnish system of coalitions is very much reliant on the “rule-of-law” approach and mechanisms that sustain coalitions and make them viable, aspects that build trust between the political actors and among the civil society. This allows parties that have had very little trust in each other to make the necessary compromises in order to build healthy coalitions and move forward. Finland also has long-held traditions regarding different types of civil society organisations, other than parties. In Finnish government negotiations, experts from various fields – from civil society to the ministries or administration and NGOs – are brought in to mediate, to help build common ground and level the playing field. Coalition is often thought of in terms of enabling a governing majority. However, coalitions might also be useful in diverse and fragmented societies, such as in South Africa, where it is not necessarily about forming a governing majority, but rather, it might be a way to increase social and political cohesiveness in the country – with the proviso of always guarding against the danger of co-option. Introductory remarks by Ambassador Anne Lammila, Finnish Ambassador to South Africa Finland achieved independence in 1917. In the beginning, the country’s parliamentary system was not ready for it, which resulted in often very short-lived governments, most of which were minority governments. The Social Democrats appeared in government for the first time in 1926, which also happened to be when Finland’s first female minister, Deputy Minister of Social Affairs Miina Sillanpää, was voted in. In 1937, the Social Democratic Party (SDP) formed the first of the “Red-Earth coalitions” with the Agrarian League, bringing together the parties representing the two largest social groups. Then, in 1939, the Winter War between the Soviet Union and Finland broke out, which moved Finland towards building a firmer national government. Then came the Continuation War. This whole period marked the start of the coalitions. And since 1937, the country has had several of them. First, there were two dominant parties, the Centre Party and the right-wing parties. However, since the Second World War, there have been many different kinds of coalitions in government – from the right, to the left and the far left parties. Nowadays, the Finnish people are so used to this tradition of coalitions that they sometimes forget it has not always been the case. In terms of the current coalition, Finland had its elections on 2 April 2023. The Coalition Party – the conservative party – received most of the votes, winning 48 seats in the 200-seat Parliament. The party that came in second was the True Finns, a populist far-right party, with 46 seats. When the Chairperson of the Coalition Party started to build the government, the Social Democrats were omitted from the plans, even though they were also winners in the elections, with 43 seats. It was one of the longest processes of building a government that Finland has experienced in its history. The process started in April, and the government was only finalised in Finland’s midsummer in mid-to-late June. The reason for this seemingly drawn-out process is that the government needed to negotiate its programme with four very different parties, and doing this effectively takes time. The current government is going strong, and it has proved that the coalition mechanism works well. Those who win in the elections, get the chance to govern. Presentation by Daryl Swanepoel, CEO of the ISI, on the Institute’s latest poll on electoral support in South Africa This information is taken from a poll conducted by Ipsos – a global leader in market research that is known to deliver accurate polling in terms of how it matches up to the real world – on behalf of the Inclusive Society Institute. It is a very large poll of 3,600 participants, taken across all nine provinces in South Africa, and in their home languages. In the poll taken in June of 2023, it was revealed that since 2015, the ruling party’s support has systematically been reduced from a high of 63% in 2015 to 33% in 2023. Whereas the opposition has been steadily growing to the point where the combined opposition has now overtaken the ruling party, coming in at 48%. There are still the undecideds and don’t-knows of 19% to consider, therefore this does not reflect the full picture, however, it does show that the ruling party is systematically declining and the opposition party is systematically climbing. That said, the opposition is very fragmented, they do not conduct themselves as one cohesive instrument. In the last year, the poll shows a big change in the ANC’s national position. The figure in the November 2022 poll was 39% support for the ANC, declining quite dramatically in the following six months to 33% in June 2023. The question is: Why the rapid decrease in support? In a previous poll, 65% of the respondents indicated that if loadshedding were to continue, it would impact their vote, and 45% said that they would not vote. It seems that if the government gets loadshedding under control, they could regain some support, but if it continues, they may lose even more support. However, other factors also affect the numbers. There are three important words to consider: eligible, registered and turnout. Eligible voters are those citizens over 18 – in South Africa, anybody over the age of 18 has the right to vote. Then there is a separate registration that needs to take place for the voters’ roll. In other words, in order to vote, a person has to be eligible, they have to register, and then they have to turn out at the poll. In South Africa, there are approximately 42.3 million people who are eligible to vote, but only 26.1 million are registered to vote. This means there is a huge gap between the number who are able to vote and those who are actually registered to vote. Applying the figure of 33% support for the ANC only to the registered voters, shows a very different picture. Support for the ANC then increases to around 43%, the DA to about 20%, and the EFF to about 18%. And this means the other smaller parties have to come into play, for example the IFP, which is an important player in KwaZulu-Natal. There are different outcomes under various scenarios. A high voter turnout would mean that around 66% of the registered voters go to the polls. The last time those sorts of figures were seen was in the first and second elections, and that number has dwindled to approximately 55% in the later elections. On the opposite end of the scale is the low voter turnout scenario based on a dramatic drop in turnout, from 55% to 36%, which is also highly unlikely. Realistically, what could be expected in the national election is a medium voter turnout. In such a scenario, the ANC will fall just below the 50% mark, which means that they will require a smaller party to help them form a governing majority. The opposition parties will battle to put a coalition government together, because that will only give them roughly 39% of the votes. Although a lot can change before the elections in May 2024, from the above snapshot, and under the present circumstances, the ANC would most probably continue to be the leading party in government, albeit with the support of at least one smaller party. But there would certainly be coalition governments in many of the provinces. In Gauteng, the ANC would only get about 36% of the support, the DA, 15%, Action SA, 12%, Freedom Front Plus and ACDP, 1% respectively. This would make it difficult for the opposition to form a coalition government on their own in Gauteng without the support of the EFF. The ANC will have the difficult choice of deciding between a number of smaller parties to form a coalition with them in Gauteng, or they will have to either take the EFF on as a coalition partner or at least have the support of the EFF to form a coalition in Gauteng. That is a worrying scenario. In the Western Cape, it is believed that the DA will not win an outright majority. They will have to go into coalition with a number of other parties. They have already formed an agreement – the Multi-Party Charter – with the opposition parties Action SA, Freedom Front Plus and the ACDP and a number of other smaller parties. This seems to confirm suspicions that there will be a DA-led coalition in the Western Cape. The scenario in KwaZulu-Natal is a particularly challenging one, because the ANC only have 22% of the support, whereas the DA have 13%, the IFP, 17%, and the EFF, 13%. It is too early to say what configuration will come into play, but it appears that, once again, the EFF will be the kingmaker in KwaZulu-Natal, either by siding with the ANC or by at least giving support to the combined opposition. That is not to say the combined opposition at the moment – being the DA, the IFP and Action SA – cannot still garner a majority in KwaZulu-Natal, it is a developing picture. In conclusion, if an election were held tomorrow in South Africa, the outcome would most probably be a coalition government at the national level, one that is easy to form. And certainly, there would be coalition governments in a number of provinces, some coming together more easily than others. The EFF could play quite a kingmaker role in many of those provinces. However, for coalitions to succeed, and to simply function, South Africa needs policy cohesiveness in setting up these coalitions, and there must be an acceptable culture of cooperation, etc. This is certainly new terrain for the country, and it will need to rely heavily on the advice of those who have gone before, such as Finland. Chapter 2 Input by Panellists Jenni Karimäki Finnish traditions regarding building and maintaining coalition government Jenni Karimäki is a contemporary historian, currently working at the University of Helsinki, and is also a fellow at the University of Turku. Karimäki’s research expertise is in parties, ideologies, political culture, political systems and party systems. This is a short historically and empirically inspired presentation on what the key elements and trajectories of the Finnish multi-party system are in order to understand the foundations on which the long tradition of Finnish coalition governments is built. There are currently nine different parties in the Finnish Parliament, with altogether 200 seats. The biggest party, the National Coalition Party, has 48 of those seats. In order to form a coalition government, and especially a majority coalition, to which Finland is accustomed, a number of parties are required to cooperate. The current coalition government consists of four parties: the National Coalition Party, Finns Party, Swedish People’s Party and Christian Democratic Party. These four parties have altogether 109 seats in the Parliament. In terms of elections, Finland has a proportional representation. It uses the D'Hondt method to calculate and count the votes. There are no electoral thresholds in Finland – if a party gets enough votes to gain a seat in an election district, then it gets the seat. In other words, there is no percentage of votes that a party has to win in order to get seats. The Finnish party system has evolved from the late 19th century until the 21st century. Several parties that were established over 100 years ago are currently represented in the Finnish Parliament, and they still occupy over half of the seats in the Parliament. These long-held traditions not only reflect stability, but they also reinforce stability. The Finnish multiparty system has been able to endure over time and also over considerable turmoil, including crises like the Civil War, the radical right activism of the interwar period, and the Second World War. However, the power dynamics between the parties have changed over time. Only once, in 1916, has one party, the Social Democratic Party, had a majority in the Parliament. Since then, it has been either the Social Democratic Party, the Centre Party or the National Coalition Party that has formed the biggest parliamentary group. In over 100 years, none of those parties have come even close to securing a majority of the seats in the Parliament. This stability is in part due to the party system being born to accommodate several different societal conflicts, some of them present already before the unicameral Parliament that is in place today. And that has been the case since 1907 – Finland has had a unicameral Parliament for well over 100 years. Conflicts between labour and capital, between urban and rural areas and between different languages – there are three native languages in Finland: Finnish, Swedish and Sami – are still relevant and they are still represented across the political spectrum, despite the fact that they have been present from the beginning. This relatively unchanged party system is also a testament of the parties’ and voters’ willingness and ability to commit to the pluralist multiparty structure and its preconditions. In this regard, the Civil War has served as an example of the worst-case scenario of an extreme conflict that polarises a nation. It left deep divisions in society but also an understanding of never wanting to experience that again. Even though during the interwar period, from the 1920s-1930s, Finland did not have one majority government or majority coalition, it still had coalitions. It was in 1937 that the first majority coalition was built in Finland. The stability and legitimacy of the democratic system has also been, in part, guaranteed by including all parties in government coalitions. Radical ideas and those parties or actors willing to destabilise the status quo have been tamed through offering responsibility, and at the same time, willingness to take responsibility has been expected of them. And this has thus far worked quite well. But it also means that the parties have been able to evolve over time, and with time. This is the third observation. From the 19th century onwards, Finland has evolved from an agrarian country into a post-industrial consumer economy, known for advanced technology and high levels of expertise. The parties have not only been able to sustain their original mobilising of societal conflicts and constituencies but have also been able to attract new audiences among upcoming generations and new professions. The changes affecting the current politics and political situation the most have occurred during the 1990s and 2010s, when first the Green Party, in the 1990s, and then the Finns Party, in the 2010s, established their strong positions within the Finnish party system. This has caused the party system to fracture, but when it comes to coalition governments, both parties have adapted to the Finnish system and taken part in the executive. The work of Professor James A Robinson, who has, together with Professor Daron Acemoglu, written books such as Why Nations Fail and The Narrow Corridor, focusses on, among other things, examining inclusive and extractive elements in societies, and how these elements contribute to economic and social welfare and practices of democracy. It can be deduced from their work that coalition governments are both a result and precondition of inclusive political systems and inclusive political institutions, at least from the Finnish perspective. The strong legalistic tradition in Finland descends from the 19th century, when Finland, as an autonomous grand duchy of Russia, was born first as a nation, and subsequently, as a state. This created the foundation for the strong Finnish state. And this is how, alongside the strong state, the pluralist multiparty system created a basis for inclusive political institutions, among many other things. The strong state and inclusive political system in some sense incarnated from the 1960s onwards in aspirations to develop Finland into a Nordic welfare state and enhance and strengthen the liberal democratic features. These aspirations and ideals were then embraced throughout the party system, resulting in a consensus and compromise-seeking political culture. Even if the economic and social welfare of the Finnish state and nation has been a driving force behind the consensus on compromise-prone political culture, it is important to remember the geopolitical setting that has always had a significant impact on Finland and had an impact on why there have been strong aspirations for national unity. Being a neighbour to Russia and, during the Cold War, the Soviet Union, has been a key element contributing to the understanding that a small nation must be internally united in order to survive externally. Regarding the institutional framework that has contributed to the long tradition of coalition politics in Finland, it is important to look at local democracy and local democratic practices. During the 19th century, Finnish citizens were united in the face of the common external adversary, which was then the Russian Empire. But after the Civil War, they came together in the newly independent Finland under the lowest common denominator: the rule of law. After the war, previous bitter enemies had to cooperate, first and foremost, at the municipal level. In order to do that, the one thing they could all agree on was abiding by the law. Up to and during the 1990s, as an example, the law stipulated that decisions regarding especially important financial decisions had to be made with two-thirds majority in the municipal councils. In most councils, this meant that cooperation and coalitions were unavoidable. This was one institutional key element contributing to coalition tradition being strengthened in Finland. Most politicians began, and still begin their careers, from the local level. Thus, the experiences gained there have an impact on how they relate to cooperation and coalitions in their later careers. Nowadays, the so-called council agreements, based on coalitions, consensus and compromise, are negotiated after the municipal elections, and these agreements outline those actors participating in the agreement as well as the policies promoted during the term. The last point is to outline very briefly, the constitutional framework and to elaborate a little on the coalition government negotiation process. Before the promulgation of the current Constitution in 2000, government formation was a process led by the President of the Republic, who had significant power to influence the composition of the government as well as the content of the government programme. Even if the parliamentary groups took part in the negotiations, the President still had a lot of say in the process and the outcome. This semi-presidential system and its presidential prerogatives began to dismantle at the same time as the Cold War came to an end. Presidents from the early 1980s onwards chose to encourage a more parliamentarian system. Even though they still could have resorted to their prerogatives, they instead wished to encourage broader distribution of power. From the 1980s onwards, the negotiation process itself began more and more to resemble the current procedure, with the parties and parliamentary groups in charge of the process and outcomes. These developments towards a parliamentary system were then, in the year 2000, codified in the new Constitution. Today, the process adheres to the election outcome, with the party chairperson of the biggest party leading the negotiations. The composition and the power dynamics of the government also resemble the election outcome in two ways: The bigger a party’s parliamentary group, the more the party has the ability to influence the contents of the government programme, and the bigger the share of the cabinet ministers they have. Simply put, the bigger the party, the more ministers and the more say they have on the government programme. Bearing in mind that it is still a negotiation to form a coalition, and therefore no party gets all the power. That is the key finding. The negotiations have no time limit, and there is substantial variation as to how long the negotiations take. After the last elections, the negotiations took 46 days, whereas the previous negotiations of the Antti Rinne and, subsequently, Sanna Marin government took only 24 days. Should the negotiations result in a stalemate, the party chairperson of the second biggest party is given a chance to attempt to form a government, and so forth. Only if there is no prospect of the parliamentary groups being able to form any kind of a coalition, be it minority or majority, are new elections arranged. However, this has never happened in the history of Finnish independence. During the semi-presidential era, stalemate-like situations did occur, but they were resolved either by forming a caretaker government or with the then President Urho Kekkonen, using his leverage to persuade parties to cooperate, usually by appealing to Finland’s precarious geopolitical situation and the risks of not having a democratically responsible government. In conclusion, the Finnish pluralist multiparty system as well as political system have a long legacy, with parties and voters committed to preserving the stability and legitimacy of the democratic system. And much of this has come as a result of the long history of Finnish independence putting substantial emphasis on these inclusive political and economical institutions. Geopolitical position and pressures have, in good and bad ways, contributed to aspirations of unity. But all in all, internal and external factors, institutional arrangements and historical traditions have generated a political culture where ideological differences are, for the most part, deliberated through the political process. As a result, as well as a precondition, this tradition of coalition governments can be considered a key element. Professor Liisa Laakso Multi-party government: sharing power or building coalition? Prof Liisa Laakso is a Finnish researcher working at the Nordic Africa Institute, a 60-year-old institute based in Uppsala, Sweden, partly supported by the government of Finland. As a political scientist, Prof Laakso has also done empirical research on democracy and elections in Africa and on conflict resolution. This presentation reflects on the topic of coalition governments from a comparative point of view and also from the point of view of the experiences on the African continent. The focus is on multiparty government. Is it about sharing power or building a coalition, and what is the difference between these two patterns? First, is the question of power sharing as a solution for political divisions in divided societies. A map from Andreas Mehler’s book about power-sharing agreements in Africa, between 1990 and 2009, shows that this experience of bringing together different political sections from the society to share political power is common in Africa. And power sharing, usually, is the kind of arrangement through which peace can be reached. Not all of these conflicts have been actual civil wars, but they have involved violence, for instance, in the case of Zimbabwe, where a coalition government emerged in 2008. A general observation of this arrangement is that there are short-term merits. The violent conflict can be solved. But what about the long-term prospects? Very often, that kind of power sharing does not, or has not, led to stable political cooperation. Arend Lijphart, who has also written about South African political divisions, believes that the democratic future in South Africa should be based on consociational democracy, which, according to his theory, creates the possibility for fragmented societies to reach stable political systems. Lijphart’s theories are based on the experiences of the Netherlands, Belgium and Luxembourg – states which are all ethnically divided, and with linguistic and, in the case of the Netherlands, also religious divisions. Lijphart’s theory is that this kind of subcultural segmentation is neutralised by consensus mechanisms. The experience of African states with fragmented societies in terms of ethnic, linguistic and religious divisions, has been an experience of one-party states soon after independence, the years of African countries becoming independent being in the early 1960s, and also of dominant party legacy, strong presidents and presidential systems. And all of this has made the distinction between the ruling party – or the dominant party – and the state a difficult one. Within that setting, what power sharing in practice has often turned out to be, is co-option, if not direct repression, of the opposition. Nowadays, it is referred to as dominant party systems, because most African states – discounting those currently under military rule, or eSwatini, which is a monarchy, or Eritrea, which is a non-party system – are implementing multiparty systems. The factions within that dominant party are quite remarkable. There are also the much discussed issues or patterns of patrimonialism or clientelism which, in one way or another, could also be linked to corruption. Currently, the biggest threat to democracy and democratic competence in Africa, and elsewhere in the world, is corruption. In terms of the South African experience, immediately after the political transition, the Government of National Unity (GNU) was an example of power sharing. At that time, the strong parties were also very strongly ethnically divided, therefore being a case of what Lijphart would have called consociational arrangement. But the GNU did not last very long, and the National Party disappeared from the political map in 2005. The critique of power sharing and consociational democracy or consociational models has been that it is very elitist and that it also, in a way, freezes the differences, ethnic differences in this case, in the political structures, which then also means that political competition is taking place inside of the party. Consequently, it can cause deep factionalism inside the parties instead of becoming a competition between different kinds of political programmes, which would attract different kinds of interest groups in the society. In that kind of setting, for a political party to participate in power sharing could damage its support among voters. The threat of being co-opted is a real one. The critique, in a way, also shows the importance of strong opposition in a stable democracy. The Finnish experience of coalition governments and government-building is that there has always been an opposition playing a role. In addition, this opposition has been one which has had the possibility of becoming a partner in the coalition after the next elections. In other words, the opposition has always had the prospect of being able to form a government or being part of the government in the next round. This is why the role of presenting criticism to the current government and being active in policy formulation is so important for the opposition. The opposition also has an important role in civic education, or political education, among its supporters and the wider public, and in the provision of information to its supporters. Therefore, one important element is that the opposition must be strongly institutionalised and must remain active between the elections. Regarding political pluralism, some of the parties in the Finnish system have a long history, and their support base has been very stable in reflecting the divisions between urban and rural Finland and also the linguistic divisions. The country has one more or less ethnically-based party – the Swedish People’s Party – which represents the interests of the 6% of the population who speak Swedish. Although Finland does have the kind of party system that is based on long-term loyalties, the idea of voluntary association and the ability of the citizens to form political parties and other interest groups freely is still an important component of political mobilisation. Sartori’s claim is very clear, that the mere existence of different groups in a society is not indicative of pluralism. What does create political pluralism is when there are cross-cutting cleavages, where people can be members of different groups and, in that way, learn how to find compromises and perhaps also learn what other people are thinking and what their interests are. This idea of adjusting different interests to changing coalitions is important in the political culture. It is useful to highlight that, after Finland’s independence, the Civil War that the country fought in was a particularly bloody one – in fact, it is still regarded as one of the bloodiest in European history, relatively speaking. It was a war where, literally, brothers were fighting against each other. It was a very traumatic experience for a newly independent country. Another highlight is that the presidential, or semi-presidential, system was exceptionally strong for a lengthy period of time. One element in Urho Kekkonen’s – who was president from 1956-1982 – position was, at least rhetorically, that he presented his leadership as one that was necessary for Finland to keep good relations with the Soviet Union. Some years during his rule were not ones in which Finland could celebrate democracy. Kekkonen even continued in the position of president without elections in the 1970s, as the majority of political parties in the Parliament at the time decided that there was no need to arrange presidential elections in Finland. Other aspects that have been very important in Finland’s political stability include the consensus culture between employers, employees and government – they have negotiated and collaborated when agreeing on increase of salaries, on tax levels and social policies. The country also has a strong tradition of agreeing on the basic elements of the welfare system. In addition, the state committees were very strong institutions, particularly previously. Nowadays, there are many arguing that Finland should go back to those kinds of strong committees, which do not exist in many sectors anymore. These were committees for the preparation of laws, where the government was involving different kinds of stakeholders and experts to discuss, openly and informally, different kinds of policy issues before the preparation and actual writing of the laws took place. This committee system – which Finland inherited from the Swedish system, and which has long historical origins – was in fact pushing civil society to get organised, which meant the skills and knowledge of citizens, through different kinds of interest groups and civil society groups, was also enhanced. That has supported political participation in the country and also the legitimacy of the political system. To conclude, Finland’s parties are more or less medium-sized, and they are not dominant parties. It is not clear before the elections which party will be the biggest one. Particularly during the last few years, the elections in that sense have been quite exciting. And although there are party loyalties among the supporters, there are also swing voters, so the parties are actually competing with their programmes. Finland has had a large variety of government coalitions. Despite operating within different coalitions and having to cooperate with very different parties, the parties have been able to exist. Sometimes, the coalition experience has led to parties losing their support. For example, the previous government experience of the Centre Party in Finland, which is the old Agrarian Party, was one which was regarded very negatively among its supporters. Currently, on the political fora, the country has a relatively new populist party, the Finns Party. It is new in the sense that, although it is strong and big, this party is not as experienced and institutionalised as far as its programme and its working structures are concerned. But perhaps now, when the party is in the government, Finland will also see institutionalisation on its part. Lastly, a few words on the minority right’s Swedish People’s Party. In the Finnish system, this is the party that has most often been in the government coalitions – both in the leftist and rightist coalitions. This is the party that during the latest government negotiation was called the kingmaker. Some of the politically heated discussions within the current government coalition have taken place between the Swedish People’s Party and the nationalist Finns Party. Virva Viljanen Legal framework and best practices of coalition government in Finland Virva Viljanen is the Dialogue Advisor for Demo Finland, a cooperative organisation of all nine Finnish parliamentary parties. She leads the programme working with Finnish politicians to facilitate dialogue between the political parties, and also organises training for the politicians. Demo Finland enhances democracy by strengthening the political participation of women, youth and persons with disabilities, in particular, and supports dialogue between political parties. Demo Finland works not only in Finland but also in eight countries internationally – Ethiopia, Kenya, Mozambique, Myanmar, Somalia, Sri Lanka, Tunisia and Zambia in cooperation with local partner organisations – to implement Finland’s democracy support. This presentation looks at examples of formal and non-formal practices of coalition governments and multiparty collaboration in Finland, as these two link to each other. Finland relies heavily both on legalist tradition, in other words, laws, and also the somewhat trust-based culture of working together between political parties. The legal framework of forming a coalition government in Finland is based on the Constitution of Finland, which states that before the Prime Minister is elected, the groups represented in the Parliament must negotiate on the political programme and composition of the government. This means that all of the parties that are elected to the Parliament take part in the preliminary negotiations or formation talks. And then, usually, the winner of the elections and the biggest party will invite a group of political parties to the actual negotiations. The parties then draft a government programme, and equally important is the central government spending limits, which is the ceiling budget expenditure for the four-year election term. There is the temptation to create several different policies, but these central government spending limits tie them to the actual decision-making. This means that what political parties promise has to be linked to the budget. At the end of the negotiations, each political party represented in the government chooses its ministers – the biggest parties get more cabinet ministers than the smaller parties in the coalition government. The government needs the confidence, or the majority of votes cast in Parliament, and this is why Finland usually has a majority government, so more than half of the seats in the Parliament. In Finland’s latest parliamentary elections, the government negotiations between the four political parties took over a month. There was a long list of party representatives and invited experts in different thematic groups negotiating during the discussions. This resulted in a government programme which was over 200-pages long, including central government spending limits. The coalition governments are also based on the multiparty collaboration in the Parliament. There is also institutionalised dialogue between the government and opposition that is based on law. Both the Constitution of Finland and, under that, the Rules of Procedure of the Parliament ensure this kind of institutionalised dialogue between political parties in the Parliament. The laws state that reports must be submitted to the Parliament. In other words, the government is obliged to hand over reports on its activities and policies to the Parliament. The Parliament also has the right to receive information, and this is especially intended for the opposition groups having access to information about what government is doing. There is parliamentary question time every Thursday. There are also interpellations to the government or an individual minister and then several non-formal procedures. It is not stated in the law that shadow budgets need to be discussed in the Parliament, but this is something that is repeated every year. Opposition groups will present their shadow budgets, and then they are addressed in the Parliament discussions. There are two of these law-based institutionalised dialogue methods in the Parliament that are worth highlighting. First is the parliamentary question hour: every Thursday, the government ministers will reply, unrehearsed, to the questions of members of Parliament, and especially opposition representatives. The second one is also mentioned in the law, that the government must reply to an interpellation – this is a formal question presented by a group of MPs – in a plenary session within 15 days of being given the question. After receiving the reply to the interpellation, Parliament then debates on the matter and proceeds to vote on whether the government or this particular minister in question enjoys the confidence of the Parliament. This is also an important way for the opposition to raise questions and issues on policy matters and then test the confidence of the government. Most of the time, the members of the Parliament that represent government political parties will then vote on the confidence, and the Parliament, the government, can continue its operations. One key element that is also based on the Constitution and the Rules of the Procedure Law in the Parliament is parliament committees. The Parliament of Finland has 17 permanent committees, with a proportional representation of parliamentary parties. This means that all the committees have members from both government and opposition groups. These are thematic committees which work on legislation and committee reports. There are, for instance, finance, education and culture, social and health affairs committees. One worth mentioning here is the Committee for the Future, which is a 17-member committee that works on future-related questions. The aim is to rise above the day-to-day politics and talk about future issues that need to be resolved within the democratic process. One aspect that the Finnish members of Parliament appreciate greatly is that meetings are confidential. The agenda is published, but all the discussions are private. This allows the members of Parliament to have discussions without heated debates that are shared by the media. The committees routinely hear from experts – the committee discusses which experts they want to hear on the policy matters. These experts can be representatives of the administration, for instance, ministries, or NGOs, researchers and so on. One key element of coalition governments in Finland is that political parties also collaborate on the local level. Often, these are the same political parties that then operate on the national level, and frequently, the same representatives work on the local level as well as in the Parliament. In fact, most members of the Parliament begin their careers on the local level, meaning they already have experience of working together at that level. Finland has more than 300 municipalities and 21 regions. This local government is based on the Constitution and then on the Local Government Act, which states how municipalities must organise their administration. Basically, municipal councils choose the members of their municipality boards, which is the executive body, proportionally reflecting the election result and the number of seats each party holds in the council. The result is that there is no government and opposition on the local councils, because most of the biggest political parties do have representation in the executive party. Therefore, there is no need for opposition leaders. In terms of non-formal best practices of political parties working together and forming coalitions: first, there is the matter of using parliamentary working groups on issues that require long-term decision-making. In Finland, if there is a difficult policy issue that requires long-term decision-making – for instance, election laws – then, often, all the parties represented in the Parliament are invited to a joint working group aimed at unanimous decision-making. The goal is to ensure that when the power changes between elections, there are no hesitant policy changes. For example, the new group in power would not change election laws, and they would have more legitimacy when they are passed into Parliament. Another Finnish example of non-formal collaboration is campaigning during elections, side by side. It is customary in Finland for political parties to share, for instance, marketplace meetings and campaign side by side at marketplaces and other events. They also have election panel discussions and public debates together. The third example, as with Demo Finland, is where there are other cooperative organisations for political parties. One influential example is the Coalition of Finnish Women’s Associations (NYTKIS), which is an umbrella organisation consisting of the women’s organisations of the parties represented in the Parliament, working together, especially on gender equality. In these organisations, such as Demo Finland and NYTKIS, there is often a common denominator bringing them together – for example, gender equality or, in Demo Finland’s case, democracy. Briefly, in Finland, Demo Finland closely collaborates with the Parliament, with committees, with political parties and their suborganisations, such as political youth and women’s organisations. It organises seminars and training events, inviting all the political parties and representatives. And its work is based on the understanding that all political parties commit to the laws and culture of inclusive democracy. Chapter 3 Discussion Who sets the government spending limits during the negotiations in Parliament? The Treasury? The previous government? The Finance Ministry prepares a budget, and then the government discusses the political aspects. There has been a very different approach to the spending limits in this government versus the previous one. This government is downsizing the budget, whereas the former government wanted to include more initiatives within the spending limits. Although the ministries prepare the spending limits, they are not set in stone. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Is it correct to say they can downsize, but they can also shift monies between various programmes? Yes, exactly. And this is something that is under a lot of heated political debate. Where does Finland invest, and where does it downsize? This is the question. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - What advice does Finland have for South Africa, where coalitions at local government level have been very unstable? The country is expecting coalitions in certainly some of its provinces and maybe even at the national level. What advice would Finland give to a country that is finding these arrangements very new and very unstable? Looking at how it was possible that after the Civil War in Finland, when it is safe to say that the different political parties and different aspects of society were very much against each other and were very suspicious of each other, then, in fact, it was the minimum denominator that everyone agreed to. They believed that the law would protect them against each other. The “rule-of-law” approach has been central in Finland in how these parties that have had very little trust in each other have been able to build that trust and build coalitions and compromise moving forward. This has been one of the key elements. But, if the legislature and the laws do not promote these kinds of procedures or trust being built, it becomes highly problematic, when the law cannot be instrumentalised in this way. What is very important is that the parties formulate political programmes, that they discuss with the members and activists and clearly write down what their main objectives are, and that the programmes are also, in economic terms, somehow feasible. If the parties have programmes, they can participate in the negotiations, and the coalition can also make compromises and develop a programme that makes the parties and politicians accountable. If the parties are institutionally weak, they could become very elitist and all about their leaders. And that is the most dangerous setting for co-optation – the parties losing support among voters if they are then not able to fulfil a very populist programme of the political campaigning, for instance. That kind of professionalisation of the political parties is very important, at the local level too. Political parties need to have their own programmes and need to be democratic within the political party. For instance, local government coalitions need to write a joint programme that everyone is committed to. In Finland, the programme is usually very detailed, because then nothing is left unsaid or unsettled, which builds trust. An important part of the negotiation is what is left out of the programme. The programme is very detailed on policies that are going to be implemented, but the political parties can also agree on issues that they want to advance during the next four years, if they are very much in disagreement on certain policy issues. Sometimes it helps to start the collaboration between political parties on some subtheme. For example, in Finland, women’s organisations from the political parties working together. This makes it somewhat easier, because these women’s organisations and women politicians often share the same problems, despite which political party they come from. There have been some similar issues raised by the youth representatives from different political parties, that they all, for instance, can collaborate on youth participation in politics. So, perhaps beginning from somewhere that is shared common ground would be helpful. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The first question is: In South Africa, where there are 400-plus parties, how possible is it in as far as coalition is concerned, as compared to Finland, which has nine parties? The second is: Except where there are elections, or at the polling booth, where civic society comes to vote, as they continue with their programmes and engagement, how far do these parties go to continue to ensure that civic society is involved? Thirdly, on the economic front, given the type of coalition pattern in Finland, how is the country doing in terms of its GDP and economically? In South Africa, there are issues of unemployment, low levels of poverty, and so on to contend with. And lastly, a very interesting point was made that there is a collaborative aspect during election campaigns, meaning that these parties come together to do campaigning for the elections. How possible, different as the parties are, is it for them to go together into the civic society, even to the communities, and do “a common electioneering campaign”? How to combine the civil society aspect into the coalition government and the trust building, is very important. The Finnish system and the Finnish tradition of coalitions and coalition building is very much reliant on trust. All these methods and mechanisms on how to sustain coalitions or make them better or make them viable, all are aspects that are building trust between the political actors and among the civil society. Finland has long-held traditions regarding different types of civil society organisations, other than parties. That is something to build on. The parties themselves have been built on this from-the-ground-up mobilisation in many cases, which also builds trust in society. Continuing on the subject of civil society, the labour unions are very important, as are the employer organisations and interest groups from the various economic sectors, agriculture, forestry, etc. They have a strong say in the preparatory work for laws. And although the level of the organisation of labour has decreased, it is still very high, at least when compared to other European countries. But the tradition, the culture, is that unions and economic interest groups are very strong. The Social Democratic Party or the Left Alliance, are closer to the labour unions. The more right-wing parties are closer to the employers’ unions. And the Centre Party, which very much represents the rural areas, is close to the interest groups from the agricultural sector. In terms of the Finnish GDP, Finland is a rich country. It is currently about US$50,000 per capita. When it comes to the spending limits for the government negotiations, what allows room to manoeuvre and what is a political issue is the ability of the government to take on loans. And this is something that is very much debated in Finland: What is the level of its debt? In that regard, Finland is not doing as well as its neighbouring Nordic countries. Finally, about collaboration in elections. There are indeed electoral alliances, particularly for the smaller parties in the regional setting. It is sometimes critical that they build alliances with other parties. This can be a way for them to get representation to the municipalities, for instance. This is a good question, how complex is the South African situation compared to Finland? Finland has a population of 5.5 million people and has only nine political parties represented in the Parliament. The total number of political parties is currently approximately 20. To address the question of civic society, it is true that in Finland, the political parties are losing membership – they really have issues engaging people in party activities. There is an increasing need in Finland to know, how does one engage people, citizens, civil society between elections and outside of the representative democracy or, for instance, the Parliament and local governments? This is done in several ways. The government has a very strong mandate or role for civil society organisations. Firstly, the Finnish state funds several civic society organisations. For example, Demo Finland gets its funding from the government of Finland or the Foreign Ministry. Then, the government also has, for instance, working groups, where there are experts from the civil society as well as politicians and government officials. There is also the question of how to engage the ordinary citizens. For instance, on a local level, there have been several attempts at participatory budgeting, in other words, giving citizens the right to say where the budget is spent. An example would be giving them an amount of €3 million and then asking them to vote on what they want the local government to spend it on. In addition, for instance, youth councils on a local level could be brought in, to hear the voice of the local young people, and so on. In terms of electoral alliances, political parties work together to campaign for the votes. But they also try to gain the same votes, campaigning side by side in order to engage more people. They invite people to these election debates or marketplace events to meet them and then compete for the votes by offering them their own policies. This is a very interesting example of how Finnish political parties are able to collaborate in this kind of competing situation. Finland also has its own policy issues currently, as was raised, the debt issue. Another is the question of the war in Ukraine, and security policies in Finland, which have been a huge public debate in Finland. It changes, depending which policy issues are the most influential in which elections. A quick comment about the elections and how the parties collaborate. The parties do campaign side by side, but the rivalry is often more intense within the party than between parties, in a sense, because the Finnish electoral system is such that the vote is cast for a person. The person represents a party list, but it is not a list vote, it is a personal vote that is being cast. Therefore, the politicians on the party lists are often competing against each other more fiercely than the party lists are competing against another party list. This is something that is debated or discussed in Finland, whether this is the most effective or the best way. For example, in Sweden, they have the list vote, and that results in a less competitive campaign atmosphere among the party members, and the campaign is more driven between the parties than inside the parties. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This phenomenon of coalitions is very new in South Africa and in South African politics. To understand the unique and complex scenario in South Africa leading up to the elections in 2024, what is bound to be seen and experienced, the following must be considered. South Africa comes to this position from the fragmented past of apartheid, versus Finland, which adopted this approach primarily as a result of World Wars. The country has a population of over 60 million, versus Finland, which has a population of roughly 5 million. Finland has three official languages, whereas South Africa has 12 official languages. Hence, South Africa is trying to solicit as much expert knowledge as possible in order to make sure that there is a transition that is smooth, and also a quick understanding of each and every political party involved in those coalition discussions and agreements, ultimately. The idea of a government programme vis-à-vis the party programme or the party manifesto, is a good one. What ordinarily happens in South Africa, is that as the election approaches, each political party will come up with its own manifesto – a programme of action that expresses what the party’s priorities and implementation strategy will be once they are in power. The parties then sell that to the masses, the electorate, to secure their votes. The voters choose the one party that resonates with them, the one that represents their interests more than the others. In South Africa, there are currently three predominant political parties right at the top, with 406 parties in total, and 14 political parties in its national government, in Parliament. And there are bound to be more than that, come 2024, after elections, because of the many new parties that have been formed recently, which of course brings a huge debate, or rather, a huge headache. The smaller the number of parties, the better – having too many parties causes confusion, especially among the voters. Of the 14 political parties in the national Parliament, there are three big parties: the ANC, DA and EFF. Each one of them stands for something totally different; they are extremes, to a certain extent. And voters have to find themselves in these three. Come the 2024 elections, the likelihood is that none of them are going to have 50% plus 1%, which guarantees their creating a government, meaning that none of them will have a majority and they are bound to reach out to smaller parties, some of which represent a totally different view point, especially on policy formulation, because that is what drives the programme of action of every political party. Of course, South Africa is also dealing with three main challenges from its historical background: poverty, unemployment and inequality. In the current experience of the coalitions at a local government level, these three dominant parties have a tendency towards a bullying attitude. If that attitude persists, leading up to the 2024 elections, and permeates the process of forming a government – they are to a certain extent in the driver’s seat – and calling upon the smaller minority political parties, how will they understand that even though they have a higher percentage of votes than others, when it comes to sitting around a negotiation table, they are in fact equals with everyone? That kind of attitude will assist parties in being sober minded in their approach in negotiations and in how they agree upon a government programme of action vis-à-vis their own manifesto. With a bullying attitude, none of the parties will allow themselves to be imposed upon by another party’s manifesto. Therefore, there needs to be a new programme of action crafted as a coalition government. The question is: How does South Africa deal with the bullying attitude of these parties, where they want to impose their policies, principles and standpoint on certain issues? How does South Africa get them to reach a particular compromise on very key, fundamental issues that must drive the coalition and, ultimately, succeed? Is there not a delay in decision-making in Finland with regard to policy or even issues that deal with service delivery? Are coalitions not delaying decision-making because of too many protected negotiations of one kind or another? Secondly, what are the values that can hold the opposing parties together to the extent that they can work together? Looking at other old democracies, many have two dominant parties, and they name these parties on their value system – for example, in America, one is Democratic, the other is Republican, defining what participation is all about. In smaller democracies like South Africa, is the issue of coalition not one that is going to delay decision-making, leading to various challenges? What can be done about this? This could be a serious fallback issue, so it must be defined. The third issue is that the level of literacy in the country, which is one that is fuelled by populism, does not allow for people to make informed decisions on matters that affect them going forward. Democracy, in essence, without political education, does not guarantee stability at all, because people must make choices on the basis of informed, rational decisions. And in most cases, that does not happen. What assistance can be forwarded in terms of assisting this conversation? And finally, what are the levels of inequality, both social and economic, in Finland? South Africans are looking for a party that can deliver and close the gap between the rich and the poor, the haves and the have-nots, and access the economy and participation in the economy. All of these things are an amalgam of the challenges that the country faces. In terms of the problem in negotiations where it is probable or expected that some of the negotiating parties might have somewhat of an aggressive tactic, and how the other parties could counteract that, in Finnish government negotiations they bring in many experts from various fields, from civil society to the ministries or administration and NGOs. This could be one way to mediate the negotiations or help the parties to build on common ground. That was analysed in Finland recently during the very long government negotiations, with one party that technically had not participated in government ever before. One explanation of why the negotiations took so long and why they invited several hundred experts to take part in the negotiations, is that because this one party had very limited experience in the negotiations, the use of experts and advice was a way to get all the parties onto a more level playing field, so that everyone had the same level of knowledge and the same picture of what was being discussed. That could be one way of pointing the negotiations in a more amicable direction. With regards the delay in decision-making, in Finland, the main goal of the government programme is that what is negotiated must be executed during the four-year term. However, if there is a particular subject that is difficult and causes some disruption or disagreement between the government parties, then these are the issues that are often delayed. Despite having these very particular, meticulous programmes, there are issues that get pushed to the sidelines and that are delayed beyond the government term. The values that all Finnish political parties share includes rule of law – meaning trust and relying on the Constitution of Finland – and the principle of democracy. But there are other policy issues that the political parties disagree on. With regards the delaying of decision-making, this is certainly true, that in terms of more inclusive politics, it always takes more time. However, one trust-based practice that is in use in Finland is that each political party holds a cabinet minister seat, and the cabinet ministers or the government ministers have the right to prepare their own laws and policy proposals based on the government programme. They have the right to prepare, with their ministries and administration, these laws. Then, when these laws or policy proposals are brought to the Parliament, the government, the members of Parliament who represent government political parties, will vote for them. It is customary that then the government will not vote against its own laws. This is something that helps with the delaying of decision-making, that each cabinet minister has the right to prepare laws, and other political parties will not delay those if they are based on the government programme. However, usually, when the elections come closer, the political parties tend to skip this rule, which means that at the end of the election term, often more laws are not being passed in the Parliament, especially the kind of controversial laws that have been delayed until the end of the term. Then, the very difficult question of how to bring members of Parliament together, especially after heated discussions in elections. It is also the case in Finland, especially in social media, that the representatives might use, for instance, language that is hurtful. And the basis for collaboration is then quite difficult. In the Parliament, for instance, the Chairperson of the Parliament usually has authority over the rules for constructive dialogue, or a code of conduct in the Parliament. The kind of speech allowed in the Parliament is regulated by these non-formal rules. Also, new members of Parliament are trained by legal advisors on how to work in the Parliament. This training is organised by the clerks of the Parliament, so non-partisan workers in the Parliament. Lastly, what Demo Finland works on is to bring the political parties to the same table, not to try and work on policies but just to understand each other better, which is also a good result in these kinds of situations. But this is a very complex situation, and the Finnish model does not apply in all circumstances. What about making compromises or being in a coalition if the values of the parties are very different? In the Finnish political culture, because of this coalition-building, in addition to ideological commitments and strong political beliefs and values, there is also a certain kind of pragmatism. In the current government coalition, looking at the values of the parties and based on the views of the members of Parliament, for instance, the Swedish People’s Party and the populist nationalist Finns Party are very far from each other. It is a miracle, from the perspective of political values, that they can be in the same government. However, they have calculated it in a very pragmatic way, that for the smaller Swedish People’s Party, it would perhaps be more challenging to be outside of the government if, in the government, there is a strong party pushing for nationalist Finns Party’s values, which, for instance, include abandoning the status of the Swedish minority language in Finland’s schools. Consequently, perhaps the Swedish People’s Party calculates that it is better for them to be in the government coalition in spite of all the difficulties. And for the government coalition, it is an important member, because with that party, they get the majority in the Parliament. This kind of pragmatism is what then creates the compromises that make cooperation possible. The issue of delays in decision-making is also a very important one. For instance, Finland has extremely expensive and important reform of the social and health services system. This is the third, if not the fourth, government that is dealing with the reform, because it has been so difficult. And now, this government, representing different parties than the previous government, has to implement what was decided before it. It is challenging, as this reform programme is vital for the whole society. On the issue of political education, it is also so important in Finland, because of, for instance, the rapidly changing media environment. The country used to have a system where there was leading national media and big newspapers and a relatively homogeneous education system and population. But now, Finland is becoming more multicultural. There are more immigrants. There is much more media, social media, for instance. It is not known exactly what the most used sources of information for the young people are. During the last elections, TikTok was a key platform for political mobilisation. Some parties or candidates were very active on that medium, whereas other parties or candidates were not. The landscape is changing so quickly that this issue of political education or civic education is something that has to be thought about and worked very hard at. And indeed, in South Africa, where the challenges of literacy, for instance, are also huge, the issues of giving information and building trust are even more critical. Chapter 4 Summary of Lessons to be learnt and gained from the Finnish Model by Erwin Schwella Prof Erwin Schwella is currently working comparatively with a host of politicians in South Africa on co-creating a Leadership for Coalition Government course, through Free State University. On contextual sensitivity and comparability for relevance, reliability, and validity in comparative analysis and action Drawing comparative insights, applications and lessons when comparing political governance and public administration systems requires awareness of and relevantly allowing for contextual sensitivity. Contextual sensitivity is the awareness and appreciation of the different historical, cultural, social, economic, and political factors that shape and influence the political, governance and public administration systems of different countries. It is important to consider such contextual sensitivity sensibly when comparing political and governance systems such as coalitions across nation states, because it helps to avoid oversimplification, generalisation, and ethnocentrism. For relevance, validity and reliability when drawing out and learning the lessons there is an imperative to recognise the diversity, complexity, and uniqueness of each case. Some  aspects that need to be considered as contextual sensitivity when comparing political and governance systems are: The historical background and trajectory of the countries, such as their colonial and post-colonial experiences, their state formation and nation building processes, their regime changes and transitions, their conflicts and wars, and their regional and international relations. The cultural and social characteristics of the countries, such as their: ethnic, linguistic, religious, ideological, and demographic diversity, values and norms, their identities, and cleavages, levels and depth of social cohesion, levels in breadth and width of cross-cutting trust in societal institutions and each other, civil society and social movements, and their media and public opinion. The economic and developmental conditions of the countries, such as their: Income levels, inequality, poverty, and unemployment, growth and stability, their structure and diversification, trade and integration, innovation and competitiveness, and welfare and redistribution. The political and institutional features of the countries, such as their: constitutional and legal framework, electoral and party system, executive and legislative branches, legislative, judicial, executive, and public administration institutions , decentralised and devolution spheres of governance such as federal and local units, and oversight, responsibility, and accountability checks and balances, the incidence of bad governance and leadership, and prevalence, and prevalence and incidence of corruption and maladministration. These matters matter as they will and should have different impacts on the formation, functioning, and performance of coalitions across nation states, depending on the context of each country. As in the comparative  example in focus here, mature democracies such as Finland may have more stable and effective coalitions than less mature, or maturing  democracies such as South Africa, because they have more: consolidated and coherent party systems, consensual and proportional electoral systems, transparent and accountable institutions, and more developed and inclusive societies. This, however, does not mean that coalitions are always better or worse in one context than in another, as there may be trade-offs, variations, and exceptions in each case. Therefore, contextual sensitivity requires a careful and nuanced analysis of the similarities and differences, the strengths and weaknesses, and the opportunities and challenges of coalitions across nation states cases. On lessons to be shared and learnt A first key insight from the Finnish experience is that coalition governments are both a result of as well as a  precondition for inclusive political systems and inclusive political institutions – which feeds the stability and legitimacy of the democratic system. In order to form a coalition government and especially a majority coalition, a number of parties are required to cooperate. Secondly, even though it is a case of, the bigger the party, the more ministers and the more say they have in the government programme, it is still a negotiation, a coalition, so nobody gets to have it all. And the discussions taking place within spending limits means parties cannot come with outrageous promises, they have to work within that framework. Thirdly, from the Finnish example it was also concluded that the Finnish system of coalitions is very much reliant on the “rule-of-law” approach and mechanisms that sustain coalitions and make them viable, aspects that build trust between the political actors and among the civil society. This allows parties that have had very little trust in each other to make the necessary compromises in order to build healthy coalitions and move forward. Fourthly, Finland also has long-held traditions regarding different types of civil society organisations, other than parties. In Finnish government negotiations, experts from various fields – from civil society to the ministries or administration and NGOs – are brought in to mediate, to help build common ground and level the playing field. Coalitions are often thought of in terms of enabling a governing majority. However, coalitions might also be useful in diverse and fragmented societies, such as in South Africa, where it is not necessarily about forming a governing majority, but rather, it might be a way to increase social and political cohesiveness in the country – of course, always guarding against the danger of co-option. The Context, realities and lessons related to coalition success in Finland Finland for more than 100 years has had relatively successful coalition governments, as during these 100 years no party has ever been even close to securing a majority of the seats in the Parliament. This stability is in part due to the party system being able to accommodate several different societal conflicts. Radical ideas and those parties or actors willing to destabilise the status quo have been tamed through offering responsibility, and at the same time, willingness to take responsibility has been expected of them. Thus far this has worked quite well. In Finnish history the Finnish people also had to build a strong state to: Counter the consistent threat to their national state of the ever-looming expansionist Russian empire and its modern-day successors, and Build and sustain a successful welfare state to nurture the Finnish citizens. This combination of a serious external force challenge and the need to improve the lives of Finnish citizens increased Finnish cohesion and the Finnish sense of national sovereignty and unity. These combined dynamics also made it necessary to internally form successful coalitions in the face of threats as well as for good governance in the interests of the welfare of the Finnish population and their democratic state and governance system. The Finnish state was formed after a very divisive civil war, and in order to provide a strong institutional base for future stability and success the Finnish institutions are committed to the institutions of constitutional democracy based on the non- negotiable rule of law in central and local government spheres. There are also statutory requirements to enhance coalition cooperation in all spheres  of governance such as a majority requirement of 66 % of the vote to pass these budgets. The culture of compliance with the institution of the rule of law and the dynamics of legal requirements for compliance towards consensus combined strengthens incentives for responsible coalition governance by all parties concerned. In conclusion,  the Finnish pluralist multiparty system as well as political system have a long legacy, with parties and voters committed to preserving the stability and legitimacy of the democratic system. And a lot of this has to do with the fact that the long history of Finnish independence has put substantial emphasis on these inclusive political and economic institutions. Lessons for South African coalitions in the context of comparability for relevance A further set of lessons from a comparative context is to consider the contextual sensitivity and comparability for relevance, reliability `and validity in comparison sensibly and sensitively. The African context  is significantly different from the Finnish context. South Africa selected to not accept the consociationalism states of Arend Lijphart in crafting its Constitution to enhance the probability for fragmented societies to reach stable political systems. This then makes the experience of African states also the South African reality.  In the African context with fragmented societies in terms of ethnic, linguistic, and religious divisions, African experience therefore often is one of one-party states after independence, and also of a dominant one or one strong party legacy, strong presidents and presidential systems. This has made the distinction between the ruling party, or the dominant party, and the state a difficult one. Within this contextual setting,  power sharing in practice has often turned out to be at best co-option, if not direct repression, of the opposition. Nowadays, it is referred to as dominant party systems because most African states are now somewhat nominally, professing to be implementing multiparty systems. The factions and their behaviours within most of these dominant parties and state party systems are quite remarkably similar.  This similarity includes patterns of patrimonialism or clientelism which, in one way or another, can also be linked to corruption. Currently, the biggest threat to democracy and democratic competence in Africa, and also elsewhere in the world, is corruption. The lesson is then that coalitions are not useful for the corruption appetites of dominant parties in Africa, as they may put brakes on the corruption possibilities for those parties. In the Finland case parties are more or less medium-sized, and they are not dominant parties. It is seldom clear before the elections which party will be the biggest one. And although there are party loyalties among the supporters, there are also swing voters, so the parties are actually competing for power  with their policy  programmes rather than identity loyalty political choices. The lesson is that voter behaviour in South Africa, and South Africa not being a mature plural democracy (yet) make South African coalition success based on the competition for ideas less probable than in Finland. Coalitions will more likely be formed based on the necessity to achieve a working majority in Parliament. Finally, the success of coalitions in Finland is grounded in formal and non-formal practices of coalition governments and multiparty collaboration in Finland, as these two link to each other. Finland relies heavily both on legalist tradition, in other words, laws, and also a trust-based culture of working together between political parties. Examples of the way in which this combination supports successful Finnish coalitions are: Formally, the Constitution of Finland requires parliamentary stakeholder groups including the political parties to negotiate the government programme and composition before electing the Prime Minister. All parties in the Parliament join the initial talks, but the election winner and biggest party invites some parties to the final talks. The parties also choose their ministers, with more seats for bigger parties. The government must have the  majority support of Parliament, which is why Finland usually has a majority government. Of equal importance is central government spending limits, which is the ceiling budget expenditure for the four-year election term. Obviously, there is an impulse to create several different policies, but these central government spending limits then tie them to the actual decision-making. What political parties promise has to be linked to the budget.  In all of the above dynamics is the result of  negotiation, and as  it is a coalition, as well as negotiated coalition  compromises result into the reality nobody gets everything. The more informal dynamics that support coalition success in Finland are: Many of the politicians start their political and governance careers in local government, where they mutually experience and learn about the value of cooperation and consensus based on an increasing resultant trust relationships even under conditions of contestation. This is valuable learning for future success. When complex and contested legislation is prepared and implemented for success in Parliament parliamentary committees work together over party borders to find sufficient consensus. This creates opportunities to learn from the proves when there are successes, and the third alternative thinking and action creates trust and consensus spilling over into future work for success. During election campaigns there is non-formal collaboration between contesting political parties where national consensus and cohesion in the interest of Finland is necessary. This sets a foundation for consensus in later complex issues where the interests of the Finnish people prevail over narrow self-interest-based party political and personal political interests. Finally, the success of Finnish coalitions is enhanced by continuous deep learning, through in-practice and in-conversation learning experiences, which is also enhanced by continuous research and learning through real world experience as well as research and education for the whole society, including all political and governance stakeholders and the electorate as citizens. The last and very significant lesson directly above is of great importance to societal, educational institutions including the formal education system, as well as in this context of professional learning institutes such as the Inclusive Society Institute and CiviNovus as two  of many other role-players in this space in South Africa. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

22 January 2024 Mr E Mathonsi Committee Secretary Portfolio Committee on Home Affairs National Assembly Parliament of South Africa CAPE TOWN By email: Electoralmattersbill@parliament.gov.za Dear Mr Mathonsi, PUBLIC SUBMISSIONS: ELECTORAL MATTERS AMENDMENT BILL [B 42-2023] The Inclusive Society Institute (ISI) is a Non-Profit Organisation that has as one of its objectives the promotion of democracy. The ISI therefore feels obliged to scrutinise legislation that impacts the proper functioning of the South African democratic dispensation. It does so by balancing the necessities of the political parties against the public interest. Background The Institute’s departure point is that political parties need to be properly resourced and equipped in order for them to carry out their constitutional mandate. Ill-equipped and under-resourced political office-bearers will merely result in the semblance of democracy, whilst in effect allowing for a well-resourced Executive to act with impunity, and is inherently biased in favour of parties in government. Thus the ISI promotes meaningful public funding of political parties. With regard to the public funding of parties, our studies have shown that where jurisdictions have high disclosure regimes, public funding is far more generous than in those that do not have high disclosures regimes. Thus a consequence of high disclosure requirements is the need for meaningful public funding lest the effective functioning of political parties be compromised. Recent research by the Inclusive Society Institute suggests that the current funding levels in South Africa is not entirely adequate. That said, it is never a good idea for one to determine one’s own remuneration. This is the effect of the proposed amendment of Section 24 of the Political Party Funding Act, 2018 (PPFA). The President – the leader of a political party – and the Parliamentary Portfolio Committee, which is comprised of representatives of political parties, are to decide adjustments to the donation disclosure thresholds and the maximum annual limits that any one donor may make to a party. In other words, parties determine what the thresholds and limitations are to be. This in the knowledge that the likelihood of a higher number of donations increases the higher the disclosure threshold,  since donors will not have to disclose. Similarly, should the maximum level of annual contributions by a single donor be set at too high a level, the original objectives of the PPFA will be undermined. And whilst the President needs to take a number of factors – as stipulated in Section 26 of the Electoral Matters Amendment Bill -  into account in determining the adjustments, there is a very real danger of falling prey to subjective decisions. It unquestionably constitutes a conflict of interest. Should the conflict of interest not be eliminated from the Bill, it will open the prospects for a legal challenge. Proposal The Institute therefore proposes that the Independent Commission for the Remuneration of Public Office-bearers mandate be extended to include the provisions contemplated by Section 26 of the Electoral Matters Amendment Bill. Should the aforementioned proposal not find favour with the Portfolio Committee, then the Institute is compelled to insist that the following minimum amendments be made: That Section 26 of the Electoral Amendment Act be amended to include the Minister of Finance as a party to be consulted by the President when making the regulations for matters contemplated in section 8(2) and (5) of the Political Party Funding Act of 2018. This is necessary since, as previously alluded to, disclosure requirements impacts the level of public funding needed, and the Minister of Finance is best placed to weigh up the required funding of political parties against the fiscal affordability for the state. That an additional factor that the President should take into account be objectively measurable norms and standards with regard to the public funding of political parties in other peer democratic jurisdictions. This will ensure that South Africa does not become an outlier, as it will introduce a measure of rationality into the decision-making process. Conclusion The Inclusive Society Institute understands the need for the Electoral Matters Amendment Bill and, in the main, supports the provisions thereof. In particular, it also understands the need for the Section 26 amendment. The Institute, however, is of the view that the current formulation has an in-built conflict of interest. The proposals put forward by the Institute aim to eliminate the conflict of interest, without compromising the substantive need for the amendment. Sincerely yours, DW SWANEPOEL CHIEF EXECUTIVE OFFICER ________________________________________________________________________ PO Box 12609, Mill Street, Cape Town, South Africa, 8010 Spaces ▪ 1006 One Thibault, 1 Thibault Square, Cape Town, South Africa, 8001 Tel: +27 (0) 21 201 1589, Email: admin@inclusivesociety.org.za, Website: www.inclusivesociety.org.za, 235-515 NPO PBO 930069173 VP Khanyile (Chairperson), Z Ndevu (Deputy Chairperson), K Millard, K Khoza, S Muller, D Swanepoel (CEO)

17 January 2023 Hon. MS Chabane Chairperson: Portfolio Committee on Home Affairs Parliament of South Africa CAPE TOWN For attention: Mr Eddy Mathonsi Email: electoralact1@parliament.gov.za Dear Hon. Chabane, SUBMISSION AND COMMENTS ON THE ELECTORAL AMENDMENT BILL [B1B-2022] Your call for written submissions and comments on the proposed amendments from the National Council of Provinces (NCOP) to the Electoral Amendment Bill (B1B-2022], refers. The Inclusive Society Institute (ISI) would like to take this opportunity to comment on the amendment to clause three and the inclusion of the new clause 23. Clause 3.1 We are pleased that the NCOP, at least in this instance, has acknowledged the importance of ensuring the constitutional requirement for the equal treatment of independent candidates and political parties. That said, we are of the opinion that the threshold remains challenging for independents to achieve, as motivated hereunder: Although it is correct to institute qualifying criteria for independent candidates (and indeed parties as well) to participate in the elections, in that some level of support needs to be demonstrated prior to the IEC incurring logistical costs attached to such participation, the test of reasonableness needs to be satisfied. Should the qualifying criteria be of such a nature that it will be difficult for candidates to achieve, it could very well be interpreted as a scheme to keep independent candidates out of the race. Whilst the Bill may technically provide for independent candidates to participate, in reality (practice) it may very well prove unachievable. Therefore a more reasonable number of seconding votes should be considered. The situation, the Institute believes, will be exacerbated through the tight timelines that will by necessity be set for candidates to secure the seconding signatures. The election already takes place mid-2024, whilst, the Electoral Amendment Bill is still under consideration. This process must be followed by IEC planning, the drafting of rules and regulations, the design of the seconding forms and templates, etcetera. Candidates cannot start collecting signatures until all the uncertainties have been cleared up, which will not leave much time for them to secure the extremely high number of seconding signatures as currently provided for. If anything, independent candidates should require less signatures than political parties, in that parties have more people and infrastructure to gather signatures than would be expected from an independent candidate who is participating as a single person on his/her own. Thus, we reiterate our previously proposed remedy, namely that independent candidates be required to secure the same number of verifiable seconding signatures that new political parties currently need to register, that is 1000. New clause 23 The ISI welcomes the introduction of this new clause that has as its objective the establishment of an Electoral Reform Consultation Panel. The inclusion of this provision provides some comfort that there is an acknowledgment by the Legislature that broader electoral reform is necessary, and that the public requires such reform on an urgent basis. We are of the view that society will not accept a delay in such reform beyond 2029. The ISI wishes to make a few proposals to strengthen the work of the Panel. 23(3)(b): Whilst we are in agreement with the public participation programme proposed, such participation should not be limited to responding to proposed models by the panel only, but should also allow for the public to also proactively make their own proposals with regard to electoral models for the Panel to consider. 23(9)(a) provides for only South African citizens to become members of the panel. It may be prudent to allow for a limited number of international experts (one or two), to become members. This may help ensure that the model ultimately proposed by the panel meets the highest international norms and standards. 23(9)(b) provides for the Minister to consult the Commission in the appointment of members to the panel. The ISI proposes the insertion of Parliament in the place of, or in addition to, the Commission. This is to ensure free-thinking by the panel, unhindered by the potential bias and/or preferences that the Commission may have. This amendment would help remove any perceived or real conflict of interest and preference of candidate to achieve the Commission’s preferred outcome. In closing, the Inclusive Society Institute wishes to place on record, that whilst it is appreciative of some of the amendments made by both the Portfolio and Select Committees, there remains areas of contention, as can be gleaned from our previous submissions (attached as Annexure A), that the Institute will continue to challenge. Once again, thank you for the opportunity to make this submission. Sincerely yours, DW SWANEPOEL CHIEF EXECUTIVE OFFICER ________________________________________________________________________ PO Box 12609, Mill Street, Cape Town, South Africa, 8010 Spaces ▪ 1006 One Thibault, 1 Thibault Square, Cape Town, South Africa, 8001 Tel: +27 (0) 21 201 1589, Email: admin@inclusivesociety.org.za, Website: www.inclusivesociety.org.za, 235-515 NPO PBO 930069173 VP Khanyile (Chairperson), Z Ndevu (Deputy Chairperson), K Millard, K Khoza, S Muller, D Swanepoel (CEO)

1 November 2022 Hon. Ms. S Shaikh MP Chairperson: Select Committee on Security and Justice Parliament of South Africa CAPE TOWN By email: ElectoralAmendB1B2022@parliament.gov.za Dear Hon. Shaikh, SUBMISSION ON ELECTORAL AMENDMENT BILL [B1B-2022] Thank you for the opportunity to make this submission in response to your call for public submissions and comments on the aforementioned bill. The Inclusive Society Institute has actively participated in the National Assembly Portfolio Committee on Home Affairs’ deliberation on the aforementioned bill. Whilst progress has been made on a number of fronts, the Institute remains concerned with regard to a number of clauses in the bill that we are of the view will not pass constitutional muster. This submission to the select committee (SC) repeats the concerns we raised with the portfolio committee. It comprises two parts, the first being the Inclusive Society Institute’s (ISI) overall assessment of the bill under consideration, and in the second, we make specific comments on the clauses we believe requires amendment. Part 1: General comments The Institute is of the view that a golden opportunity was missed, namely that Parliament should, in our opinion, have been more responsive to the broader public’s insistence on wider electoral reform, that would offer a greater degree of accountability and representivity than the current system does. To this end, the ISI again attaches (as Annexure A) our electoral proposals for consideration. We do so in light of the overwhelming view by civil society that the current proposals are neither responsive to the will of the people, nor constitutional, and not workable. To this end, the ISI would, in the event of a further extension being granted by the Constitutional Court, support the withdrawal of the current bill in favour of introducing legislation that responds more adequately to public opinion and the 2020 Constitutional Court judgement, as represented by the vast majority of civil society organisations engaged with electoral reform. It does so against the backdrop of most, if not all, submissions made in response to the portfolio committee’s (PC) call for comment; and the majority view of the Ministerial Advisory Committee (MAC). We are also aware of the correspondence addressed to the PC by the Chairperson of the MAC, cautioning against the feasibility of the existing bill under consideration. The Institute is also cognisant of the Independent Electoral Commission’s (IEC) anxiety with regard to having sufficient time to properly prepare for the 2024 general election, and that a constituency-based election requiring the establishment of a Demarcation Board would not allow for sufficient time to prepare for the elections. However, it may be possible, as a transitional arrangement, to introduce a Multi-Member Constituency (MMC) system that is based on the already demarcated district and metropolitan boundaries already in place. In such instance, the ISI is of the view, that there will be sufficient time for the IEC to prepare for the 2024 election. At the very least, should the aforementioned proposal not be feasible, a legally-binding commitment to broader electoral reform in time for the 2029 general election needs to be made. The President has in any event, in his response to the Zondo-Commission report, alluded to this need, and thus it simply requires a codification thereof in the bill before the select committee. The ISI is therefore, in the absence of a will to effect broader reform at this juncture, proposing a two-step approach: Firstly, the passage of the existing before the SC in preparation for the 2024 general election, and secondly, the introduction bill of broader electoral reform in time for the 2029 general election. This, of course, with the proviso that the current bill before Parliament is able to pass constitutional muster; and it is in this regard that we have some concerns. It is the ISI’s considered opinion that the current bill is fatally flawed, the main contention being that it, amongst others, goes against the first founding principle of the Constitution of the Republic of South Africa, namely that our democratic dispensation requires equality in the advancement of human rights and freedoms. In the legislation before the National Assembly, parties and independent candidates are not treated equally. This is because independent candidates are juxtaposed against political parties, and not candidates representing political parties. To achieve an outcome which is proportional, in general, under the proposed system, is not possible. We attach hereto, as Annexure B, our own legal opinion, as it relates to specific clauses, for your consideration. (Please note that the legal opinion is drafted in response to the PC B1-2022 version of the bill). Part 2: Specific comments in response to the SC’s call In this part, the ISI highlights some of its concerns that emanates from the legal opinion contained in Annexure B. The SC is urged to take note of the various other nuances contained in the opinion. Amendment to 31A The Institute would like to acknowledge the constructive proposed changes to section 31A, as well as the other positive proposals by the PC, not least those related to Schedule 1A. Even though we must again express our concerns regarding the distance between independent candidates and the electorate resulting from the system being proposed by the PC - due to the large regional electoral battlefields – which is in in contrast to the ISI’s MMC-based system that will result in greater accountability and representivity due to the elected representative being closer to the voters, and therefore more responsive to them, given the constitutional need for equality, the idea of permitting independent candidates to be nominated in as many regions as they like, is supported. That said, the proposal, read with the provision in Schedule 1A that independent candidates contesting in more than one region cannot aggregate their vote, results in independent candidates not being treated equally to parties, and is thus, in our view, unconstitutional. It does not allow for an independent candidate that may have sufficient national support to reach the quota, but not so in in particular region, to gain a seat in Parliament, whilst, a small political party with an equal distribution of votes, could be elected via the compensatory list. The remedy, the Institute suggests, lies in allowing for independent candidate votes across the country to be aggregated and by removing the division of National Assembly seats in regional seats and national compensatory seats. See the Institute’s comment below on the amendment to Schedule 1A. The Institute would also wish to ask the SC to give sufficient consideration to the practicalities with regard to the ballot papers. Already, given the large number of political parties that contest elections, South Africa has unwieldly ballot papers. Add to this the additional independent candidates, which could quite easily far exceed 50 nationally, the length of ballot paper will undoubtedly be extremely daunting to most voters. Amendment to 31B(3)(a) Once again, the principle of equality is breached, in that independent candidates will require in excess of between 13,000 and 18,000 supporting signatures, whilst a party, at its formation, only requires 1,000 signatures, should it contest a national election, and less, when contesting provincial or municipal elections. Cognisance needs also to be taken of section 19(3)(b) of the Constitution, which posits that any additional limitations on an adult citizen to stand for public office is not permissible, suffice for it being justifiable in terms of section 36 of the Constitution. The ISI’s legal opinion suggests that the support requirement for contesting elections imposes a significant limitation on adult citizens’ rights under section 19(3)(b). The remedy, the Institute believes, is to either remove it in its entirety; or replace it by a requirement identical to that placed on political parties in section 15(3)(a) of the Electoral Commission Act, read with regulation 3 of the Regulations for the Registration of Political Parties (GNR.13 of 7 January 2004, as amended), namely that an independent candidate should only be required to submit a list of supporting voter signatures once and in the same number as that applied to parties. Furthermore, the number of signatures should not be that high that it could be viewed as a scheme to eliminate independent candidates from participating. Thus, the current signature required for parties to register, should not be significantly adjusted. Allocation system as provided for in Schedule 1A In that independent candidates can only compete for half the available seats in parliament, that is 200 seats, and political parties may compete for the same 200 regional seats and a further 200 compensatory seats, it means a mathematical improbability that the constitutional requirement for the election outcome to result in general proportionality can be achieved. As per the ISI’s legal opinion, “while viewed separately, it can probably be argued that the manner of allocating seats to independent candidates and political parties respectively in the bill will not fall foul of section 19(3)(b) of the Constitution, the differentiation between the two categories raises constitutional concerns…the differentiation between types of candidates in how seats are allocated will quite likely fall foul of section 9 of the Constitution” and the in general proportionality provision. An aggravating factor is the fact that the bill does not adopt a similar approach in the allocation of seats in provincial legislatures. For those seats, the different types of candidates are treated the same in the allocation calculation. That raises serious doubts as to the justifiability of the differentiation in allocating seats in the National Assembly. To this end the Institute offers two possible remedies: But first, there are two aspects to consider. In the first instance, in addition to Froneman’s assertion that the system should not fail the proportionality test, Judge Jafta, in the same Constitutional Court ruling, noted that it was not only about disenfranchising citizens, but it cannot be that some people’s voices “count more than others in our representative democracy”. He states that the rationale goes beyond disenfranchisement, but also to the distortion of equality in political voice, that is the voters’. Therefore, the Institute’s conclusion is that a vote for an independent candidate must be of equal value to that of a party, at least insofar as it will not distort proportionality, in general. The discarding of non-aggregated votes goes against this principle. The second aspect relates to the problem of independent candidates’ votes being discarded in provinces due to them not being aggregated, which could distort general proportionality in a particular region. To overcome this, the Institute puts forward two possible remedies: Remedy 1 In the event of the SC not accepting our recommendation to aggregate the votes of independent candidates across the whole country, then it is recommended that independent candidates be restricted to participating in only one region, as is the case for party-nominated candidates. But in addition, that the division of National Assembly seats in the regions and national compensatory seats be done on a more equitable 300/100 split, that is 300 seats allocated to independent candidates and parties competing in the regions and 100 seats to parties competing for seats on a compensatory list. This will move the electoral system closer to the ideal of achieving proportionality, in general. It will also improve equality in the handling of independent candidate votes on the one hand, and party candidates on the other. Whilst this remedy does not result in full equality, it substantially improves the position from that proposed in the SC’s version of the bill. We are of the opinion that the improvement should be sufficient to satisfy the notion of proportionality, in general, as the availability of 25 per cent compensatory seats is generally considered sufficient to ensure a reasonable level of proportionality, despite deviations from proportionality in the multi-member constituencies in South African under the current dispensation in the provinces. However, a greater level of equity is achieved in remedy 2 below. Remedy 2 As a remedy it is recommended that the division of National Assembly seats in regional seats and national compensatory seats be removed from the bill and that the allocation of all seats in the National Assembly be done on an equal basis between independent candidates and political parties, along the same lines as that for provincial legislatures. Whilst the total number of seats is calculated for the single national constituency, the IEC will still distribute elected representatives in accordance with provincial-to-national and national-to-national party lists as is the current position. Then the only difference between the way in which the allocation of seats are made between parties and independent candidates are that the excess votes – that is more votes than needed to be elected – are discarded. This, the Institute believes justifiable, in that an independent candidate can by definition be no more than one person. The Institute cannot refrain from pointing out that political parties also have excess votes, that is, votes beyond the number of votes exactly required to obtain the number of seats they are allocated, and that is never seen as a particular problem under any electoral system. Should an independent candidate be of the view that the excess votes cast for him- or herself should not be discarded, or is of the belief that he or she has broad public appeal that will result in many more votes than required to be elected, then there is a remedy: He or she needs to take a personal decision as to whether he or she wishes to be an independent candidate or part of a broader movement. Should it be the latter, he or she retains the right to form a party in order to benefit from any excess votes. Three ballot papers: 6(1) of Schedule 1A In the Institute’s view, the introduction of three ballot papers for the national and provincial elections, as it relates to the question of equality, creates a number of problems: The effect is that parties are being compensated for the share of votes “lost” to independent candidates when the PR (compensatory) element is calculated. For reasons already explained, and as pointed to in the Institute’s legal opinion, this undermines the constitutional requirement for equality in treatment between independent candidates and political parties. One can speculate about the problems for voters – a voter voting for an independent at the regional ballot and the DA for the compensatory ballot is one thing. But another voter will maybe vote ANC on the regional ballot and EFF on the compensatory – it will be very confusing for many voters and for the IEC staff. This will further compromise the achievement of overall proportionality. The remedy is to maintain the two-ballot system for national and provincial elections. This becomes feasible given the proposed equality of treatment proposals above, since there is no change from previous elections in the manner seats are calculated. The Institute is also of the view that the voting system needs to be simple for the voter to understand and for the IEC to execute. Conclusion The ISI wishes to thank the SC for the opportunity to make this submission. It is our humble submission, however, that what is trying to be achieved is to amend a system that is not amendable. What is required is a completely new system. To this end we once again propose an urgent electoral reform dialogue between the public policymakers and civil society to, given the tight timeframes running up to the 2024 general election, chart a practical way forward that satisfies both the broader public sentiment and the practical considerations for delivering an on-time, free and fair election in 2024. Sincerely yours, DW SWANEPOEL CHIEF EXECUTIVE OFFICER ________________________________________________________________________ PO Box 12609, Mill Street, Cape Town, South Africa, 8010 Spaces ▪ 1006 One Thibault, 1 Thibault Square, Cape Town, South Africa, 8001 Tel: +27 (0) 21 201 1589, Email: admin@inclusivesociety.org.za, Website: www.inclusivesociety.org.za, 235-515 NPO PBO 930069173 VP Khanyile (Chairperson), Z Ndevu (Deputy Chairperson), K Millard, K Khoza, S Muller, D Swanepoel (CEO)

15 September 2022 Hon. MS Chabane MP Chairperson: Portfolio Committee on Home Affairs Parliament of South Africa CAPE TOWN By email: electoralact1@parliament.gov.za For attention: Mr E Mathonsi Dear Hon. Chabane, SUBMISSION ON ELECTORAL AMENDMENT BILL [B1-2022] Thank you for the opportunity to make this submission in response to your email dated 2 September 2022 in which you have called for public submissions and comments on the aforementioned Bill. Our submission is made in two parts, the first being the Inclusive Society Institute’s (ISI) overall assessment of the Bill under consideration, and in the second, we make specific comments on the provisions highlighted in your 2 September 2022 call. Part 1: General comments The Institute is of the view that a golden opportunity was missed, namely that Parliament should, in our opinion, have been more responsive to the broader public’s insistence on wider electoral reform, that would offer a greater degree of accountability and representivity than the current system does. To this end, the ISI again attaches (as Annexure A) our electoral proposals for consideration. We do so in light of the overwhelming view by civil society that the current proposals are neither responsive to the will of the people, nor constitutional, and not workable. To this end, the ISI would, in the event of a further extension being granted by the Constitutional Court, support the withdrawal of the current Bill in favour of introducing legislation that responds more adequately to public opinion and the 2020 Constitutional Court judgement, as represented by the vast majority of civil society organisations engaged with electoral reform. It does so against the backdrop of most, if not all, submissions made in response to the Portfolio Committee’s (PC) call for comment; and the majority view of the Ministerial Advisory Committee (MAC). We are also aware of the correspondence addressed to the PC by the Chairperson of the MAC, cautioning against the feasibility of the existing Bill under consideration. The Institute is also cognisant of the Independent Electoral Commission’s (IEC) anxiety with regard to having sufficient time to properly prepare for the 2024 general election, and that a constituency-based election requiring the establishment of a Demarcation Board would not allow for sufficient time to prepare for the elections. However, it may be possible, as a transitional arrangement, to introduce a Multi-Member Constituency (MMC) system that is based on the already demarcated District and Metropolitan boundaries already in place. In such instance, the ISI is of the view, that there will be sufficient time for the IEC to prepare for the 2024 election. At the very least, should the aforementioned proposal not be feasible, a legally-binding commitment to broader electoral reform in time for the 2029 general election needs to be made. That is, what the ISI has termed a two-step approach: Firstly, the passage of the existing Bill before the PC in preparation for the 2024 general election, and secondly, the introduction of broader electoral reform in time for the 2029 general election. This, of course, with the proviso that the current bill before Parliament is able to pass constitutional muster. It is the ISI’s considered opinion that the current bill is fatally flawed, the main contention being that it, amongst others, goes against the first founding principle of the Constitution of the Republic of South Africa, namely that our democratic dispensation requires equality in the advancement of human rights and freedoms. In the legislation before the National Assembly, parties and independent candidates are not treated equally. This is because independent candidates are juxtaposed against political parties, and not candidates representing political parties. To achieve an outcome which is proportional, in general, under the proposed system, is not possible. We attach hereto, as Annexure B, our own legal opinion, as it relates to specific clauses, for your consideration. Part 2: Specific comments in response to the PC’s 2 September 2022 call In this part, the ISI highlights some of its concerns that emanates from the legal opinion contained in Annexure B. The PC is urged to take note of the various other nuances contained in the opinion. Amendment to 31A The Institute would like to acknowledge the constructive proposed changes to section 31A, as well as the other positive proposals by the PC, not least those related to Schedule 1A. Even though we must again express our concerns regarding the distance between independent candidates and the electorate resulting from the system being proposed by the PC - due to the large regional electoral battlefields – which is in in contrast to the ISI’s MMC-based system that will result in greater accountability and representivity due to the elected representative being closer to the voters, and therefore more responsive to them, given the constitutional need for equality, the idea of permitting independent candidates to be nominated in as many regions as they like, is supported. That said, the proposal, read with the provision in Schedule 1A that independent candidates contesting in more than one region cannot aggregate their vote, results in independent candidates not being treated equally to parties, and is thus, in our view, unconstitutional. It does not allow for an independent candidate that may have sufficient national support to reach the quota, but not so in in particular region, to gain a seat in Parliament, whilst, a small political party with an equal distribution of votes, could be elected via the compensatory list. The remedy, the Institute suggests, lies in allowing for independent candidate votes across the country to be aggregated and by removing the division of National Assembly seats in regional seats and national compensatory seats. Thus, we suggest that section 7(2)(c) in the PC’s proposed amendments be changed accordingly and in line with the Institute’s comment below on the amendment to Schedule 1A. The Institute would also wish to ask the PC whether they have given sufficient consideration to the practicalities with regard to the ballot papers. Already, given the large number of political parties that contest elections, South Africa has unwieldly ballot papers. Add to this the additional independent candidates, which could quite easily far exceed 50 nationally, the length of ballot paper will undoubtedly be extremely daunting to most voters. Amendment to 31B(3)(a) Once again, the principle of equality is breached, in that independent candidates will require in excess of 10,000 supporting signatures, whilst a party, at its formation, only requires 1,000 signatures, should it contest a national election, and less, when contesting provincial or municipal elections. Cognisance needs also to be taken of section 19(3)(b) of the Constitution, which posits that any additional limitations on an adult citizen to stand for public office is not permissible, suffice for it being justifiable in terms of section 36 of the Constitution. The ISI’s legal opinion suggests that the support requirement for contesting elections imposes a significant limitation on adult citizens’ rights under section 19(3)(b). The remedy, the Institute believes, is to either remove it in its entirety; or replace it by a requirement identical to that placed on political parties in section 15(3)(a) of the Electoral Commission Act, read with regulation 3 of the Regulations for the Registration of Political Parties (GNR.13 of 7 January 2004, as amended), namely that an independent candidate should only be required to submit a list of supporting voter signatures once and in the same number as that applied to parties. Furthermore, the number of signatures should not be that high that it could be viewed as a scheme to eliminate independent candidates from participating. Thus, the current signature required for parties to register, should not be significantly adjusted. Allocation system as provided for in Schedule 1A In that independent candidates can only compete for half the available seats in parliament, that is 200 seats, and political parties may compete for the same 200 regional seats and a further 200 compensatory seats, it means a mathematical improbability that the constitutional requirement for the election outcome to result in general proportionality can be achieved. As per the ISI’s legal opinion, “while viewed separately, it can probably be argued that the manner of allocating seats to independent candidates and political parties respectively in the Bill will not fall foul of section 19(3)(b) of the Constitution, the differentiation between the two categories raises constitutional concerns…the differentiation between types of candidates in how seats are allocated will quite likely fall foul of section 9 of the Constitution” and the in general proportionality provision. An aggravating factor is the fact that the Bill does not adopt a similar approach in the allocation of seats in provincial legislatures. For those seats, the different types of candidates are treated the same in the allocation calculation. That raises serious doubts as to the justifiability of the differentiation in allocating seats in the National Assembly. To this end the Institute offers two possible remedies: But first, there are two aspects to consider. In the first instance, in addition to Froneman’s assertion that the system should not fail the proportionality test, Judge Jafta, in the same Constitutional Court ruling, noted that it was not only about disenfranchising citizens, but it cannot be that some people’s voices “count more than others in our representative democracy”. He states that the rationale goes beyond disenfranchisement, but also to the distortion of equality in political voice, that is the voters’. Therefore, the Institute’s conclusion is that a vote for an independent candidate must be of equal value to that of a party, at least insofar as it will not distort proportionality, in general. The discarding of non-aggregated votes goes against this principle. The second aspect relates to the problem of independent candidates’ votes being discarded in provinces due to them not being aggregated, which could distort general proportionality in a particular region. To overcome this, the Institute puts forward two possible remedies: Remedy 1 In the event of the PC not accepting our recommendation to aggregate the votes of independent candidates across the whole country, then it is recommended that independent candidates be restricted to participating in only one region, as is the case for party-nominated candidates. But in addition, that the division of National Assembly seats in the regions and national compensatory seats be done on a more equitable 300/100 split, that is 300 seats allocated to independent candidates and parties competing in the regions and 100 seats to parties competing for seats on a compensatory list. This will move the electoral system closer to the ideal of achieving proportionality, in general. It will also improve equality in the handling of independent candidate votes on the one hand, and party candidates on the other. Whilst this remedy does not result in full equality, it substantially improves the position from that proposed in the PC’s version of the Bill. We are of the opinion that the improvement should be sufficient to satisfy the notion of proportionality, in general, as the availability of 25 per cent compensatory seats is generally considered sufficient to ensure a reasonable level of proportionality, despite deviations from proportionality in the multi-member constituencies in South African under the current dispensation in the provinces. However, a greater level of equity is achieved in remedy 2 below. Remedy 2 As a remedy it is recommended that the division of National Assembly seats in regional seats and national compensatory seats be removed from the Bill and that the allocation of all seats in the National Assembly be done on an equal basis between independent candidates and political parties, along the same lines as that for provincial legislatures. Whilst the total number of seats is calculated for the single national constituency, the IEC will still distribute elected representatives in accordance with provincial-to-national and national-to-national party lists as is the current position. Then the only difference between the way in which the allocation of seats are made between parties and independent candidates are that the excess votes – that is more votes than needed to be elected – are discarded. This, the Institute believes justifiable, in that an independent candidate can by definition be no more than one person. The Institute cannot refrain from pointing out that political parties also have excess votes, that is, votes beyond the number of votes exactly required to obtain the number of seats they are allocated, and that is never seen as a particular problem under any electoral system. Should an independent candidate be of the view that the excess votes cast for him- or herself should not be discarded, or is of the belief that he or she has broad public appeal that will result in many more votes than required to be elected, then there is a remedy: He or she needs to take a personal decision as to whether he or she wishes to be an independent candidate or part of a broader movement. Should it be the latter, he or she retains the right to form a party in order to benefit from any excess votes. Three ballot papers: 6(a) and 6(b) of Schedule 1A In the Institute’s view, the introduction of three ballot papers for the national and provincial elections, as it relates to the question of equality, creates a number of problems: The effect is that parties are being compensated for the share of votes “lost” to independent candidates when the PR (compensatory) element is calculated. For reasons already explained, and as pointed to in the Institute’s legal opinion, this undermines the constitutional requirement for equality in treatment between independent candidates and political parties. One can speculate about the problems for voters – a voter voting for an independent at the regional ballot and the DA for the compensatory ballot is one thing. But another voter will maybe vote ANC on the regional ballot and EFF on the compensatory – it will be very confusing for many voters and for the IEC staff. This will further compromise the achievement of overall proportionality. The remedy is to maintain the two-ballot system for national and provincial elections. This becomes feasible given the proposed equality of treatment proposals above, since there is no change from previous elections in the manner seats are calculated. The Institute is also of the view that the voting system needs to be simple for the voter to understand and for the IEC to execute. Conclusion The ISI wishes to thank the PC for the opportunity to make this submission. It is our humble submission, however, that what is trying to be achieved is to amend a system that is not amendable. What is required is a completely new system. To this end we propose an urgent electoral reform dialogue between the public policymakers and civil society to, given the tight timeframes running up to the 2024 general election, chart a practical way forward that satisfies both the broader public sentiment and the practical considerations for delivering an on-time, free and fair election in 2024. Sincerely yours, DW SWANEPOEL CHIEF EXECUTIVE OFFICER ________________________________________________________________________ PO Box 12609, Mill Street, Cape Town, South Africa, 8010 Spaces ▪ 1006 One Thibault, 1 Thibault Square, Cape Town, South Africa, 8001 Tel: +27 (0) 21 201 1589, Email: admin@inclusivesociety.org.za, Website: www.inclusivesociety.org.za, 235-515 NPO PBO 930069173 VP Khanyile (Chairperson), Z Ndevu (Deputy Chairperson), K Millard, K Khoza, S Muller, D Swanepoel (CEO)

Copyright © 2023 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute. DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. All records and findings included in this report, originate from a panel discussion on developing a new economic blueprint for South Africa, which took place in August 2022 December 2023 Author: Mariaan Webb, Creamer Media Writer Editor: Daryl Swanepoel Content Abbreviations & acronyms Overview Construction mafia tactics Root causes & perspectives Law enforcement initiatives Recommended interventions & actions Conclusion References Abbreviations & acronyms DPP: Director of Public Prosecutions HDI: historically disadvantaged person ISI: Inclusive Society Institute PPPFA: Preferential Procurement Policy Framework Act SAPS: South African Police Services Overview South Africa’s construction industry, traditionally a key driver of economic growth and development, has been grappling with a significant challenge in recent years – the encroachment of criminal elements. Known as construction mafias, these illicit networks initially surfaced in KwaZulu-Natal about a decade ago. Their influence has since expanded across all provinces, resulting in significant losses to the economy. Construction sites, ranging from small-business driven to large-scale projects, serve as prime targets for these decentralised syndicates. Leveraging local connections, they employ tactics such as extortion, violence, intimidation and disruption to advance their objectives. Extortion has seeped into the fabric of the business landscape and is now considered an unfortunate cost of doing business (Venter, 2023). This report encapsulates key insights from a seminar conducted by Inclusive Society Institute (ISI), centred on the repercussions of construction mafias on the construction industry. The seminar served as a follow-up to a previous construction summit, during which the profound impact of these illegal activities on the industry was highlighted as a major concern. Addressing the challenges posed by construction mafias is imperative to revitalise this vital sector of the economy. Over the past 15 years, the once-thriving construction industry has experienced a sharp decline, in large part owing to the government’s failure to deliver on promised infrastructure projects. Re-establishing the industry on a solid foundation is crucial, given the powerful role that construction can play in poverty reduction. Construction has an inherent capacity to generate additional economic output and jobs, particularly for low-skilled and semi-skilled workers. Construction mafia tactics Construction mafias, often labelled ‘business forums’, are networks that employ violence and other illegal means of controlling access to public sector procurement opportunities. These groups typically invade construction sites, demanding money or a stake in development projects. In 2019, at least 183 infrastructure and construction projects worth more than R63-billion had been affected by the construction mafia. Since then, invasions have continued at construction sites across South Africa (Organised Crime and Corruption Reporting Project, 2022). The interpretation of the Preferential Procurement Policy Framework Act (PPPFA) plays a key role in the activities of construction mafias. The PPPFA, aimed at promoting economic transformation and empowering historically disadvantaged individuals (HDIs), designates that 30% of public procurement contracts should be allocated to designated groups. Construction mafias misuse this provision, demanding that 30% share of the contract value accrue directly to forum members or the forum itself. Despite portraying their actions as aligned with transformation goals, the National Treasury condemned this practice as illegal. Such exploitation undermines the intended objectives of the PPPFA, hindering uplifting of HDIs and small businesses (National Treasury, 2018). Often intertwined with this deliberate misinterpretation of the PPPFA are other causes that escalate violence on construction sites, including unreasonable community expectations, gangsterism, and the exploitation of high unemployment levels during community protests against infrastructure projects. According to the South African Police Services (SAPS), construction mafias employ a range of tactics, including threatening projects with violence and heavy weaponry, demanding a share without genuine interest in the job itself. Their criminal activities extend to terrorising, intimidating, assaulting, and in some cases, even killing employees or managers on site. The use of such disruptive tactics aimed at hindering progress on construction projects is also often accompanied by theft. In gang-infested areas, like Cape Town, in the Western Cape, gang leaders go further by registering companies. If their demands for the 30% share are not met, they employ mafia tactics to intimidate construction projects. Additionally, they may coerce constructors into paying protection fees to avoid rival gang interference. This tactic further underscores the complex intertwining of criminal elements with legitimate business activities in these regions. The construction mafia has progressively established political connections, aligning with specific factions within the governing party. This association provides protection and facilitates access to state procurement opportunities. The external interference has led to increased uncertainty in fulfilling contract obligation. Contractors must now navigate not only legal and contractual requirements, but also an environment fraught with demands and threats imposed by criminal elements. This interference has created a challenging environment for contractors, impacting their ability to meet project milestones and completion deadlines. Moreover, the interest in heading off the activity of such mafias has seen the selection of subcontractors and suppliers becoming a precarious process, resulting in compromised quality and delayed project timelines. Contractors are caught between honouring legitimate contractual commitments and addressing illicit pressures from the construction mafia. The criminal justice cluster is tasked with addressing this issue as per the National Development Plan Vision 2030. Root causes & perspectives Keynote speakers at the ISI’s Construction Mafia Summit shared their insights on the factors contributing to the emergence of the construction mafia, shedding light on the dynamics that fuelled its rise. Construction sites as symbols of economic freedom The discussion highlighted the symbolic importance of construction sites as potential catalysts for economic freedom. Unemployed youth and disenfranchised communities see these sites as avenues for brighter prospects. Emphasising the democratic route, this discourse rejected violence as a means to attain economic freedom and stressed adherence to democratic principles. Blurring public and private project lines The conventional distinction between public and private projects based on where the funding for projects is coming from, was challenged. Participants highlighted a shift in perceiving both public and private endeavours as entities to further broader public interest. This departure from the traditional dichotomy necessitates a renewed emphasis on transparency and accountability within the private sector. Communities are expressing a growing demand for active involvement in decision-making processes related to construction projects. This involvement extends to critical aspects such as land acquisition and the issuance of development permits. The call for transparency and accountability resonated as a means to ensure that both public and private initiatives align with the needs and aspirations of the communities they impact. Addressing economic inequality Persistent economic inequality in South Africa took centre stage in the discussions. According to World Bank statistics, the top 10% in South Africa earn more than 65% of the total national income and the bottom 50% just 5.3% of the total (Chancer et al, 2022). Historical legacies and insufficient addressing of social justice were identified as root causes. Businesses, especially within the construction sector, have been urged to embrace transparency, accountability and inclusive practices as means to address the widening wealth gap. The construction industry is consequently perceived as a battleground for economic inclusion and the addressing of racial discrimination, amid what is felt, by many, historically, to be a corruption-prone sector. A unified stance against economic disenfranchisement is needed, emphasising the need for the private sector to recognise transparency and accountability principles. Organised crime on the rise Organised crime, specifically within the construction sector, has witnessed a noticeable upswing since 2014/15. The rise in crime in general is attributed to a broader decline in State capacity, notably during a period of State capture. This era witnessed compromised integrity and capabilities in key State-owned enterprises, fostering corruption and diminishing law enforcement effectiveness. The decline in State capacity and inefficiencies within the law enforcement sector created an environment conducive to the flourishing of organised crime. Weak governance structures, including oversight mechanisms, contribute to a lack of accountability within law enforcement agencies. Criminal networks exploit this vulnerability in accountability and law enforcement, strategically targeting construction sites for financial gain. This trend has permeated throughout the country, resulting in significant economic repercussions. Organised crime is now an existential threat to South Africa’s democratic institutions, states the Global Initiative Against Transnational Organised Crime. It argues in a September 2022 report that a more strategic response is needed to organised crime to ensure a more stable future for South Africa. Left unchecked, organised crime and its associated illicit markets will continue to inflict serious harms (Global Initiative Against Transnational Organised Crime, 2022). Solutions to address the crisis in the SAPS, as identified in government policies and documents, are not being implemented, which cannot be blamed on a lack of resources as is often cited as the reason for the country’s crime crisis. The police budget has increased substantially over the last decade, yet its ability to solve crimes has significantly diminished. The Institute for Security Studies states that, over the last 11 years, the police budget has increased by 86%, but that its ability to solve murders has decreased by 55% and the ability to solve armed robbery has dropped by 53%. Addressing the crisis requires leadership reform within the police, reinforced governance structures, and the establishment of robust independent oversight mechanisms. A failure to share information and resources among government, civil society and the private sector also hinders efforts to combat organised crime. Law enforcement initiatives Law enforcement agencies have implemented targeted plans to combat the pervasive influence of the construction mafia. This operational approach is aligned with the national competence strategy, which is under the guidance of the national commissioner. This strategy is divided into two key components: the geographical approach and the organised crime approach. Under the geographical approach, intelligence operations are strategically positioned to gather information, identify hotspots and pinpoint problematic provinces. Police teams are deployed to these hotspots, with a clear mission to stabilise and normalise affected areas. Essential infrastructure teams are mobilised to address challenges in specific regions. The organised crime approach focuses on identifying individuals, syndicates and criminal entities involved in extortion within the construction mafia. Employing unconventional methods, law enforcement collaborates with the National Prosecuting Authority, engaging in prosecutor tutorial guided investigations. This collaborative effort extends to institutions like asset forfeiture and financial investigations, differentiating between major and project investigations. Cases are categorised as criminal groupings when individuals are not linked as syndicates. Since 2019, 712 cases have been reported, with 93 currently in court. A total of 722 suspects have been arrested and 96 cases are fully completed and referred to the Director of Public Prosecutions (DPP) for decision. The DPP has issued nonprosecution certificates in 34 cases. Moreover, 165 case dockets were closed due to a lack of further information. Of the completed cases, 50 were finalised after being received from court, leading to 52 convictions with a combined sentence of 89 years and seven months. The police’s multi-dimensional and multi-operational approach includes monthly stakeholder engagements in all provinces. These forums are co-chaired by the SAPS and the business sector. Recommended interventions & actions Conclusion The challenges presented by construction mafias constitute a complex and multifaceted issue, carrying far-reaching implications for South Africa. The urgent task of dismantling the construction extortion economy, especially in regions where it has entrenched itself, is formidable. Yet, overlooking the issue will have repercussions for both the construction sector and the nation at large. The repercussions transcend projects delays and associated costs. The overall toll includes lost investment, as the high-risk environment acts as a deterrent for foreign companies considering large-scale projects in the country. This, in turn, hinders economic growth and development. The emigration of skilled technical personnel further exacerbates the issue, depleting the pool of expertise available for crucial infrastructure projects. The South African Forum of Civil Engineering Contractors of South Africa made a plea for urgent government action in 2019. Directed to then Finance Minister Tito Mboweni, the plea highlighted the urgency in addressing the construction mafia. It specifically noted that 110 engineers and other highly skilled technical personnel had either left the country, or were on the verge of doing so, owing to personal risk to their lives and the lack of work because of projects being disrupted at gunpoint (Mfebe, 2019). In summary, the construction mafia is not merely a challenge of criminality; it is a complex issue which increasingly overshadows legitimate concerns about inequality and significantly impacts on the country’s economic landscape. Urgent and comprehensive collaboration is imperative to mitigate the immediate and long-term consequences of this phenomenon, ensuring the stability and growth of the construction sector, and by extension, the economy. References Chancel et al. 2022. World Inequality Report 2022. [Online]. Available at: https://wir2022.wid.world/www-site/uploads/2021/12/WorldInequalityReport2022_Full_Report.pdf [accessed November 22, 2023]. Global Initiative Against Transnational Organised Crime. 2022. Strategic Organised Crime Risk Assessment: South Africa. [Online]. Available at: https://globalinitiative.net/wp-content/uploads/2022/09/GI-TOC-Strategic-Organized-Crime-Risk-Assessment-South-Africa.pdf [accessed November 22, 2023]. Mfebe W. 2019. Construction industry up in flames: Urgent action required. [Online]. Available at: https://cdn.ymaws.com/www.safcec.org.za/resource/resmgr/press_releases/SAFCEC_Letter_to_Minister_of.pdf [accessed November 22, 2023]. National Treasury. 2018. Media statement: Alleged abuse of the 30% subcontracting requirements provided for the Preferential Procurement Regulations, 2017. [Online]. Available at: https://www.treasury.gov.za/comm_media/press/2018/2018080701%20Alleged%20abuse%20of%20preferential%20procurement%20regulations.pdf [accessed November 22,2023]. Organised Crime and Corruption Reporting Project. 2022. Extortion or transformation: The construction mafia in South Africa. [Online]. Available at: https://globalinitiative.net/analysis/extortion-construction-mafia-south-africa/ [accessed November 22,2023]. Venter, I. 2023. Is SA Inc fighting the construction mafia, or adapting to incorporate it?, Engineering News, June 27, 2023. [Online]. Available at: https://www.engineeringnews.co.za/article/is-sa-inc-fighting-the-construction-mafia-or-adapting-to-incorporate-it-2023-06-27#:~:text=The%20construction%20mafia%2C%20or%20so,employ%20specific%20people%20or%20subcontractors [accessed November 22, 2023]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

Occasional Paper 10/2023 Copyright © 2023 Inclusive Society Institute PO Box 12609 Mill Street Cape Town, 8010 South Africa 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the permission in writing from the Inclusive Society Institute. DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. DECEMBER 2023 by Prof William Gumede Former Programme Director, Africa Asia Centre, School of Oriental and African Studies (SOAS), University of London; former Senior Associate Member and Oppenheimer Fellow, St Antony’s College, Oxford University; and author of South Africa in BRICS (Tafelberg). Introduction Special economic zones (SEZs) can still play a critical role in developing new industries, beneficiating raw materials, and diversifying South Africa’s exports. That is, if they are linked to the overall national development strategy, done in full partnership with business, and freed from the public sector’s governance problems – such as incompetence, corruption, and inefficiency – which have stymied SEZs up to now. SEZs, which are also termed export processing zones, free trade zones and free ports, are geographically demarcated areas which governments dedicate to specific industrial development by giving fiscal incentives, regulatory exemptions, and public infrastructure support (Aggarwal, 2008; Asian Development Bank, 2007; Cirera & Lakshman, 2014; Farole & Akinci, 2011; Fruman & Zeng, 2015). It is a key policy tool many high-growth economies in Asia have used to build manufacturing, export capacity, and lift economic growth (IFC, 2016; ILO, 1988; Ishida, 2009; Jayanthakumaran, 2003). The South African government has adopted as a policy objective the establishment of regional industrial zones – Special Economic Zones and Industrial Parks (IPs) – and corridors (Gumede, 2022a; Gumede, 2022b). The SEZs and IPs are recognised amongst the tools that are catalytic economic drivers in regional economy ecosystems. They drive continuous attraction, promotion and retention of direct domestic and foreign investment to achieve transformative industrialisation and sustainable economic growth in South Africa, especially in underperforming regions (Jayanthakumaran, 2003; Johansson & Nilsson, 1997; Cirera & Lakshman, 2014; Litwack & Qian, 1998; Rhee et al, 1990; Rodrik, 2004; Zeng, 2017; UNCTAD, 2019; UN ESCAP, 2019; UNIDO, 2015). The first industrial SEZ was established in 1959 in Shannon, Ireland. The country established the Shannon Free Airport Development Company, a development agency, to establish an industrial free zone, to generate alternative sources of traffic, business and tourism at the Shannon airport and adjacent area. Investors were given special tax concessions, simplified custom operations, and cheap investment attractions. The area was transformed into an air training base, maintenance and repair centre, and a tourist attraction. Global impact of SEZs According to the International Labour Organisation (ILO), by 2007, SEZs accounted for US$851 billion-worth of exports – which is around 41% of global exports – and for 68 million direct jobs created (ILO, 1988). Clustering infrastructure, industries, and public goods in one specific region, means that a country can leverage scale to build a critical mass of related, complementary, and synergetic value chain components that need similar skills, technologies, and market links. This forms an ecosystem that boosts economic development, attracts investment, and fosters an environment for innovation. Companies share resources, costs, and infrastructure. The overriding idea is to concentrate limited public funds, resources, and infrastructure on developing or establishing new industries with the help of private sector investment, skills, and technology. Importantly, as Douglas Zhihua Zeng (2017) argues, SEZs “should only be used to address market failures or binding constraints that cannot be addressed through other options. If the constraints can be addressed through countrywide reforms, sector-wide incentives, or universal approaches, then zones might not be necessary”. If successful, SEZs could provide positive spillovers to the rest of the economy. These spillovers can be direct or indirect. The direct impacts are rising economic growth, new manufacturing industries, and beneficiation (Jayanthakumaran, 2003; Johansson & Nilsson, 1997; Cirera & Lakshman, 2014; Litwack & Qian, 1998; Rhee et al, 1990; Rodrik, 2004; Zeng, 2017; UNCTAD, 2019; UN ESCAP, 2019; UNIDO, 2015). It boosts employment, increases local and foreign exchange income. It brings new technology, innovation and skills, and diversifies the economy. It increases the productivity, efficiency and competitiveness of local companies, the productivity of local labour, and the income of local citizens. Figure 1: The growth of SEZs around the world since 1975 (UNCTAD, 2019 SEZs Report) Why do countries establish SEZs SEZs are established because governments lack the skills, resources, and capacity to introduce nationwide reforms to establish conducive environments for investment attraction, industrial upgrading, and infrastructure development. Furthermore, as Douglas Zhihua Zeng argues, governments also established SEZs because they lack the capacity to tackle vested interests, capture, and political opposition to country industrialisation reforms, and then implement it on a smaller, more protected and ring-fenced scale, through SEZs. If a country lacks effective state capacity, public services, and infrastructure such as power, water and transport, SEZs – located in a smaller geographical area – could offer an opportunity to use the limited state capacity, public services and infrastructure to potentially great impact, which could catalyse other parts of the economy. However, if investments can be attracted, industrialisation fostered and technology, knowledge and skills acquired through normal policy avenues, incentives, and state-business partnerships, SEZs are not necessary. SEZs must only be established if constraints such as government corruption, incompetency and red tape cannot be addressed speedily in the broader economy, and SEZs then are established as smaller protective zones where these governance failures are absent. A critical part of the success of SEZs is that they need to be part of the overall national industrial strategy of a country – they must be exempt from the inefficiencies, corruption and mismanagement normally associated with developing country governments and must respond to real market demands (Warr, 1989; Watson, 2001; White, 2011; Wolman, 2014; Zeng, 2017). Some of the purposes of SEZs are to create new industries that do not exist at the time, beneficiate raw materials and so create new value-add industries, attract foreign investment when it is difficult to do so under normal circumstances, and to develop an export economy. SEZs can also be specifically established to transfer new technology, knowledge, and skills that the country lacks, but are critical to industrialisation. The SEZ is almost an incubator, where experimenting, manufacturing, innovation, and learning can happen behind protective barriers – and the final product then exported to global markets. SEZs have been crucial in skills, technology and knowledge transfer and industrial upgrading from basic to value added industries in South Korea, Taiwan, and Singapore. Dubai created a successful Dubai Internet City SEZ, which attracted the world’s largest technology companies, such as Microsoft, Oracle, and IBM. Dubai also created universities as special economic zones, bringing in foreign universities, teachers, and technology to accelerate skills transfer, technology upgrading and innovation (Khaleej Times, 2019). Africa, Morocco, and Nigeria set up SEZs to penetrate the European Union market (Bräutigam & Tang, 2010; Farole, 2011; Fruman & Zeng 2015). Rwanda set up SEZs to manufacture new products for exports. Within three years, 3% of Rwanda’s workforce were employed in its new SEZ. Mauritius set up SEZs to produce processed sugar for export. Such was the Mauritian success, that when the sugar industry was at its peak, the country dominated 50% of the EU market for processed brown sugar (Bräutigam & Tang, 2010; Serlet, 2022). The SEZs must be a zone of competent management, corruption-free, devoid of public sector red tape, and effectively integrated within local and global markets. SEZs must have a specific industrialisation purpose and must not become a collection of subsidised warehouses that create jobs artificially at great cost, as has been the case in many failed SEZs in Africa and South Africa. Many researchers worry that SEZs may only develop certain parts of a country, creating “enclaves”, and the impact will not be transferred to the wider economy. The rise of SEZs Taiwan in 1966, Singapore in 1969, and South Korea in 1970 were amongst the first to create SEZs (Asian Development Bank, 2007). Both Singapore and South Korea established SEZs to use their cheap and available labour, to foster labour-intensive, export manufacturing industries and attract foreign investment – based on giving investors incentives for setting up these industries (Lall, 2000). Singapore established SEZs to build a transhipment trade hub, removing goods and service taxes on products. By the 1970s Singapore created specialised SEZs, particularly to build the petroleum refinery-related industry (Koh, 2006). Singapore has established more than 400 companies trading in petroleum and related products since it established its first SEZ in 1969. For another, the creation of the petroleum refinery-related industry has spurred associated and related petroleum business, including professional services, research and development, and marketing and sales. After the Asian financial crisis, these East Asian states changed the focus of their SEZs, as economic circumstances changed, to industrial upgrading, productivity increases and innovation (UNCTAD, 2019; UN ESCAP, 2019; UNIDO, 2015). They moved their SEZs from low-skilled, low-cost labour to value added activities and technology – these economies now had developed high-skilled workforces, for high-skilled labour. For example, these countries introduced technology, biotechnology, science, and software SEZs. China successfully used SEZs as zones of experimenting to develop the market system, while building new industries the country did not have and learning new technologies it lacked. China launched its “Open Door” reforms in 1978 to introduce market reforms in selected regions, in what former Chinese leader Deng Xiaoping called “crossing the river by touching the stones” (Shen & Xu, 2011; Sklair, 1991). The Chinese SEZs were zones where the usual government red tape, corruption and ideology were set aside, focusing on securing foreign investment by giving incentives, attracting new technology and knowledge. The Chinese SEZs built new industries, created new jobs and new export industries (Shen & Xu, 2011; Sklair, 1991). It fostered positive spillovers to the economy – new knowledge, new technology, and new management techniques were transferred to other parts of the economy, which lifted economic growth, development, and the country’s competitiveness (Shen & Xu, 2011; Sklair, 1991). It is estimated that SEZs have contributed to 22% of China’s GDP, 41% of the country’s foreign direct investment, and 60% of its exports. China’s technology commercialisation rate is around 10%. However, in SEZs the technology commercialisation rate is around 60%. SEZs in Africa There are an estimated 237 SEZs in Africa, found in 38 countries (Farole, 2011; Fruman & Zeng, 2015). Mauritius introduced Africa’s most successful SEZs. In 1970, the country established its first SEZ to manufacture textiles and garments, food and beverages, and batteries for export. In the Mauritius export processing zone, companies are free to locate anywhere on the island. Mauritius’ 1970 Export Processing Act broke from the typical post-colonial African import substitution strategy to one of an export-led industrialisation strategy. Mauritius was more successful than many African countries in that it focused on export-led growth, and the SEZ was part of its export-led industrialisation strategy, not a standalone policy like in many African countries where SEZs have had pedestrian results (Bräutigam & Tang, 2010). Mauritius allowed duty-free imports of inputs meant to be used to make products for export. The country gave tax holidays to exporters. Exporters were given reduced rates on power, water and building materials – charging rates similar to international competitors. Domestic companies who were exporters received credit from banks at lower interest rates. The Mauritian government was careful to push labour-intensive production, to soak low-skilled unemployment. Cheaper credit was calibrated in such a way that companies did not shirk labour-intensive for capital-intensive production, because of the cheaper capital available. Mauritius’ priority was to get manufacturing going in the country – whether it was foreign owned or not – transferring knowledge, technology, and skills, and so, fostering positive spillovers to the rest of the economy. Mauritius placed no restrictions on foreign ownership of manufacturing companies – unlike many countries in post-colonial Africa. The country has been governed more pragmatically than almost all African countries, by spending more attention on building and maintaining reliable infrastructure. Mauritius, governed for most of its postcolonial history by coalitions, has been Africa’s most stable country – it has managed its public finances prudently and is amongst the least corrupt – which is an immediate attraction for investors (Gumede, 2022a). The country also prioritised making its public service competent. The SEZs were governed competently, honestly, and pragmatically. By 1988, employment in Mauritius’ SEZs was 85% of total manufacturing employment and 31% of total country employment. By the late 1980s, value add produced in SEZs made up 12% of GDP. More recently, Ghana, Ivory Coast, and Nigeria were successful in processing cocoa through SEZs, by partnering with Western companies to co-produce chocolate, the value-add of cocoa, for export, rather than exporting raw, unprocessed cocoa (Gumede, 2022a; Gumede, 2022b). The value-add chocolate creates more jobs, and earns more money, than the raw commodity cocoa. Morocco and Nigeria have also recently established successful SEZs in partnership with foreign investors to penetrate the European Union market. Rwanda has successfully established SEZs in partnership with industrial country companies to manufacture new products for exports. SEZs in South Africa: The Tshwane Automotive SEZ The ANC government has adopted the policy of SEZs as one of its pillar strategies to lift growth, boost investment, and increase job creation (Majola, 2023). The South African SEZ programme started with the Industrial Development Zone policy review in 2007 by the Department of Trade, Industry and Competition (the dtic). The SEZ Act stipulates that SEZs should have a feasibility study and business case. Most of South Africa’s SEZs are state operated. There are 11 designated SEZs, with nine fully operational. They have attracted 167 operational investors, with total private investment of R21,9 billion, and created almost 20 000 operational jobs. The SEZs include Saldanha Bay in the Western Cape, Dube Trade Port and Richards Bay in KwaZulu-Natal, East London and Coega in the Eastern Cape, Maluti-A-Phofung in the Free State, Musina Makhado in Limpopo, and Tshwane Automotive in Gauteng. The Tshwane Automotive SEZ launched in South Africa in 2019 appears to offer the prospect of being a model SEZ. It secured and was driven by a private sector anchor, Ford Motor Company. The company invested over R15 billion to produce the next generation of Ford Rangers. Ford, the national and provincial governments, and the City of Tshwane are co-governing the SEZ in a public-private partnership. Ford is represented on the management board of the entity, which includes representatives of the dtic, Gauteng Department of Economic Development, and the City of Tshwane. Staff from the Eastern Cape SEZ, Coega, were deployed to assist in the establishment of the Tshwane Automotive SEZ. This is one of the rare occasions where all spheres of government are involved in a governing partnership with the private sector. The Tshwane Automotive SEZ was co-designed from the start with Ford and has been given clean audits since its inception. The government has spent R2 billion on the project, with material inputs for the production aimed at 45%. The SEZ will, in cooperation with Transnet, develop a rail-to-port corridor for vehicle and components exports – which will include Tshwane and Gqeberha, in the Eastern Cape – the completion of which is a critical component that will determine the success of the SEZ. Figure 2: Special Economic Zones in South Africa Critical success factors for SEZs Before a country establishes SEZs it must put together a national industrialisation, economic growth, or long-term development plan (Aggarwal, 2008; IFC, 2016; ILO, 1988; Ishida, 2009; Jayanthakumaran, 2003). Such a plan must be based on an analysis of the state of the country’s economy, its development needs, and its human capital. There must be an assessment of the comparative advantages – the resources – the country has, what it can do with domestic resources, capital, and skills, and what will need to be built with outside help. Related to this, there must be a comprehensive analysis of the country’s comparative position in the global economy, trade, and supply chains. A central pillar of any country’s industrialisation, growth and long-term development strategy is how to build local production capacity (Aggarwal, 2008; IFC, 2016; ILO, 1988; Ishida, 2009; Jayanthakumaran, 2003). Establishing SEZs, for example, could be a mechanism to build local production capacity through attracting foreign investors to the SEZs and then getting them to upgrade local production capacity, by partnering, transferring technology, skills and knowledge, and sourcing inputs from local firms. There must be clear reasons for the establishment of SEZs, including how they fit into the national industrialisation, development, or long-term country economic growth plan (Gumede, 2022a; Gumede, 2022b). For example, if the intention is to attract foreign direct investment – which the country cannot do through traditional methods – the objective of attracting investment through the SEZs must be integrated into the country’s economic growth plan. There must be a business case for SEZs (Zeng, 2017), meaning there needs to be a global demand and a market for the products manufactured in the SEZs. SEZs must be embedded in the comparative advantage of the country. They cannot be established based on political, ideological, and interest-group considerations. It is crucial that SEZs form part of a country’s national long-term development or industrialisation plan, rather than operating as standalone job creation exercises. Once the business case for SEZs has been made, there must be an assessment of the implications of establishing them for existing businesses, institutions, and policies. After this, SEZ laws, policies, and supporting and governing institutions will have to be created. Well-thought out, pragmatic and credible laws, regulations, and institutional frameworks are crucial to govern SEZs. Governments must implement these consistently, honestly, and competently to foster investor, market, and society confidence that SEZs are not simply going to be another avenue for corruption, self-enrichment, and failure (Gumede 2022a; Gumede 2022b). The business environment must be conducive, efficient, and friendly. The costs of doing business – registration, logistics and customs – should be conducive to companies setting up. The public infrastructure – power, rail, and water – for SEZs must be working, reliable, and cost effective. Poor, unreliable or lack of infrastructure is a significant factor increasing the costs of doing business, global pricing competitiveness of products manufactured and of labour utilisation. Sound infrastructure is a vital competitive advantage for investors to set up shop in an SEZ – without it, it makes no sense. SEZs must also be linked to the supply chains of local industry (Jayanthakumaran, 2003; Johansson & Nilsson, 1997; Cirera & Lakshman, 2014; Litwack & Qian, 1998; Rhee et al, 1990; Rodrik, 2004; Zeng, 2017; UNCTAD, 2019; UN ESCAP, 2019; UNIDO, 2015). Local firms must provide the inputs, material, and services to the companies in the SEZs. If local firms do not have the capacity to do so, it will be crucial for governments to also provide them with assistance, incentives, and rebates to enable them to link into the supply chains of the SEZ firms. Doing this considerably maximises the positive spillover effect of SEZs. South Korea, Taiwan, and Singapore, for example, provide tax rebates, technical assistance, and infrastructure subsidies for local companies to their SEZs, to foster backwards linkages between SEZ companies and local ones. In addition, there must be a clear strategy of how local firms will be linked to the supply chains of the global firms in the SEZs (UNCTAD, 2019; UN ESCAP, 2019; UNIDO, 2015). Many global firms buy more than half of their inputs from other firms and outsource their manufacturing to other smaller firms. In such cases they only retain design, marketing, and research and development functions. It is important that, as part of the industrialisation strategy, a country encourages global firms attracted to the SEZs to source their inputs locally. And if local companies do not have the capacity to produce inputs for global companies, the SEZ strategy must outline how the capacity of local firms could be built up with the support of foreign investors. This would usually involve incentives being given to foreign players to build the capacity of local suppliers through transferring skills, technology, and providing financial support, where necessary. Governments must actively intervene to overcome market failures in the value chains linking local suppliers to that of international investors (Jayanthakumaran, 2003). For example, local suppliers may not know about the opportunities available to produce inputs for international companies. At the same time, the international companies may not know of the existence of local companies with the capacity to provide inputs for their products. In some cases, the inputs of local companies may be of too poor a standard or too costly for global firms. Government SEZ policy must then provide tools to help local firms to produce quality inputs at affordable prices for global investors. Also, in many cases developing country hosts of SEZs employ predominantly unskilled citizens because educational institutions are weak, ineffective, and under-resourced. The SEZs can be a catalyst to establish new training institutions, research, and development centres, and to upgrade existing ones. There must be clear monitoring, evaluation, and assessment mechanisms to ensure that SEZs are on track to meet their stated objectives (Gumede 2022a; Gumede 2022b). There must be benchmarking of SEZs against comparable successful ones elsewhere, and mechanisms need to be in place to intervene if they are in danger of veering off course. Those managing SEZs must be held accountable for delivering on the stated objectives of the entities. China, for example, in 1996 issued an official administrative decree for the compulsory regular evaluation of SEZ performance: SEZs that are poorly managed, not meeting their development targets, and growing too slowly lose their SEZ status. Chinese SEZs are evaluated based on several performance indicators, including knowledge creation and technological innovation – which are measured based on how much the education level of employees has been uplifted – R&D expenditure, the number of R&D institutions and technology innovation incubators established. Another performance indicator is the level of industrial upgrading and how structural optimisation capabilities have been boosted, which are measured by the number of new high-tech companies created, the number of services firms established, the number of intellectual property registrations, and the number of listed companies attracted to the SEZ. The SEZ performance in China is also measured based on how local companies developed in the SEZs penetrate international markets and fare in global competition, by the ratio of their employees who have received education abroad, and the number of intellectual property registrations lodged abroad (Asian Development Bank, 2007). The Chinese SEZ performance is also measured in relation to companies’ sustainable development capacity increases, by way of looking at the number of employees with master’s and doctoral degrees, the increases in taxable revenues, the growth rate of the companies, and the amount of new investment undertaken. SEZs could be fully government or business owned or could be public-private arrangements. In developing countries, the SEZs that have been fully government owned have mostly failed – as all the governance failures of the public sector, such as corruption, incompetence and red tape are also repeated in the SEZs, making them unviable. Public-private arrangements, in which the private sector co-govern and co-manage, have generally been the most successful. An effective, competent, and pragmatic management structure is crucial in managing an SEZ, and sound operational management skills are vital to its success. Many SEZs in African countries and in South Africa fail from the same lack of implementation and execution management capacity found in their public sectors – especially if the same incompetent public sector managers are operating the SEZs. It is also important that the SEZs’ good infrastructure development is from time to time transplanted to the wider region in which they are situated. This means that the infrastructure built for the SEZs must be part of an integrated public infrastructure development programme, whereby the SEZs’ public infrastructure investment would be the anchor of broader infrastructure expansion. Another point is that SEZs are often giant industrial structures that could damage the environment significantly. Therefore, the construction and management of SEZs must be done in such a way that it protects the environment, which many first generation SEZs neglected. Many are now trying to clawback environmental destruction in the wake of mass industrialisation that took place without taking the environment into account. It is very important that SEZ investors be required to report on environmental, sustainability and governance (ESG) performance. Many of the first generation SEZs’ construction also rarely consulted with local communities, civil society, and interest groups. It is essential that new SEZs do not repeat this mistake. If a site chosen to construct the SEZ involves uprooting local communities, acquiring their land and property, the process must be done in consultation with them, fairly and compassionately. Consultations of local communities, civil groups and interest groups are also essential in identifying the local comparative advantages and to link the SEZ investor activities with local input, material, and services – and so, crucial to maximising the positive spillover effect of the SEZs. Why SEZs have failed in many African countries Some SEZs in African countries have failed for the same reasons that development has failed in these countries (Farole, 2011; Fruman & Zeng, 2015). These reasons include SEZs not being integrated as part of a national growth, industrialisation, or long-term development strategy. SEZs are often set up for ad hoc policy objectives, such as only job creation or only attracting foreign investment. In Africa, only Mauritius, Rwanda, and Morocco made SEZs part of their national development strategies. In many African countries, SEZs are often set up for ideological, patronage, and corrupt reasons – and without making a business case. In many cases African governments established SEZs without having anchor private sector investors, with the exception of Mauritius, who was successful with its SEZs in developing a processed sugar export industry because the government partnered with European processing companies. African SEZs have not prioritised linking industries to global value chains (Jayanthakumaran, 2003). They also have not prioritised using SEZs to develop new industries for export. Neither have African countries used SEZs to add value to the primary commodities they export, or to upgrade their countries’ skills, industrial and technology bases. Projects are often not decided based on a business case, but rather on which company gives the largest kickback. A case in point, the CEO of South Africa’s Dube Port SEZ was suspended because of alleged corruption. Many African and South African SEZs are not internationally competitive – and are economically non-viable. To add insult to injury, the public sector governance failures – such as incompetence, corruption, and inefficiency – that often undermine development, delivery and efficiency in South Africa and African countries, are often replicated in SEZs. These problems have stymied SEZs and continue to do so. The legal, regulatory, and institutional structures of SEZs are often lacking or poorly defined – open to different interpretations or not consistently implemented. Furthermore, in some cases, although national governments decree SEZs, they in many instances do not give them the financial, infrastructure or political support they need. New governments, whether national or provincial, often withdraw support for SEZs established by their predecessors. Furthermore, SEZs in African countries often take a long time to put legal, regulatory, and institutional structures in place – and sometimes even longer to operationalise. Incentives are regularly either uncompetitive or overgenerous, undermining local industry outside the SEZs. Business procedures are slowed down by red tape, and special customs and tax are incoherently applied. Governments often do not have an adequate understanding of the requirements of businesses they want to invest in the SEZs. Many African and South African SEZs start without any anchor business investor, which means that the state is the anchor or biggest investor. In South Africa, the most successful SEZ is the Tshwane SEZ, which started with an anchor investor, the Ford company. Public infrastructure in African and South African SEZs is often as bad as in other parts of South Africa, with the supply of power, water, rail, roads, ports, and internet frequently not consistent. This makes it unproductive for investors to set up in SEZs – as the cost of infrastructure is a determining factor. In South Africa, and in many African countries, the governance management structures of SEZs are in many instances run solely by the state – and the corruption, incompetence, and mismanagement that is found there is oftentimes replicated in the SEZs. One of the reasons for the success of the Tshwane SEZ has been the partnership between the government and the private sector, where both co-govern the management structure. Many African and South African SEZs are not linked to their domestic economies, but operate largely as enclaves, disconnected from the national economy and local businesses (Litwack & Qian, 1998). Investors in SEZs are also insufficiently linked to local suppliers. And there are for the most part no special efforts to strengthen the capacity of local suppliers who may not have the capacity to deliver inputs to foreign companies in the SEZs. For another, SEZs also often do not integrate primary, secondary, and tertiary industries into the investor supply chain. Unlike in China, Singapore, or Taiwan, African and South African SEZs regularly do not integrate the boosting of research and development into the industrial value chains of companies in the SEZs (Zeng, 2017). The technical learning, knowledge transfer, and industrial upgrading is therefore not as effective as it has been in many Chinese, South Korean, or Singaporean SEZs. This means that the positive spillover effects of SEZs are absent or minimised. Many African and South African SEZs have faced opposition because they were constructed on sites where local residents had to be forced off their land, moved out of their homes, and their ancestral and historical sites disturbed. This has led to local communities often being hostile to SEZs in their areas. For example, communities opposed the construction of the Makhado, in Limpopo, and Dube Port, in KwaZulu-Natal, SEZs over allegations that their land rights had been trampled on. It is therefore crucial that land, property, and historically sensitive site disputes with local communities over the location of SEZs are resolved in a participatory manner. More importantly, SEZs must not be located on sites where it involves displacing communities, expropriating their property, and desecrating their historical sites. SEZs: Policy lessons for South Africa There has to be a solid business case for creating an SEZ. However, many of South Africa’s SEZs have been established without a credible business case. In 2001, the government established the Coega Industrial Development Zone in Gqeberha to create an integrated steel producing hub. The steel hub was not based on a business case that looked at global demand over the coming years. Not surprisingly, the government struggled to attract initial anchor business investors. The business case for the Musina Makhado SEZ in Limpopo is also not clear. The Musina Makhado SEZ is supposed to be an energy metallurgical cluster centred around a coal cluster, which consists of 20 interdependent industrial plants, including ferrochrome, ferromanganese, stainless steel, high manganese steel and vanadium steel, thermal, coking, coal washery and lime, and cement plants. The Limpopo provincial government said 11 memorandums of understanding have been signed with the Chinese government for investment of around US$1.1 billion. The government said 70% of what would be produced will be exported to China. But there is a real danger that the Musina Makhado SEZ may not align to global demand, so crucial to the success of any SEZ. In September 2021, China’s President Xi Jinping (Volcovici, Brunnstrom & Nichols, 2021) told the United Nations General Assembly that China will not build any new coal-fired power projects overseas, in support of increasing its green and low-carbon energy footprint in developing countries – which raised questions around building a coal cluster SEZ in Limpopo based on exports to China. The South African government often takes a long time to put legal, regulatory, and institutional structures in place for SEZs – and sometimes even longer to operationalise. When finally in operation, business procedures are slowed down by red tape, and special customs and tax are incoherently applied. In comparison, the Hamriyah Free Zone in Sharjah, in the United Arab Emirates could grant a license to establish a business within 24 hours of submitting all the required documents. The problem is that South African national, provincial or city governments often do not have an adequate understanding of the requirements of businesses they want to invest in the SEZ. The government services provided for SEZs are also frequently not tailored for the investors they want to attract. Then Trade and Industry Minister Rob Davies announced the formation of the Musina Makhado SEZ in 2017. However, the project has yet to get off the ground. In March 2021, the Limpopo Economic Development and Tourism Department temporarily stopped the project, saying its environmental impact assessment was “insufficient”. The project was also deemed not to have widely consulted with local communities, traditional authorities, and farmers. Countries face heavy competition for foreign investment, which can go anywhere in the world. This means countries cannot afford to give the same or a lesser value proposition to competitor countries. Despite this, incentives to attract private sector investors in South Africa are often uncompetitive. South Africa’s special economic zone tax incentive was introduced into the Income Tax Act, but it is overly bureaucratic compared to other countries’ SEZ tax incentives – for example, to qualify, the Minister of Trade and Industry and Minister of Finance must approve. Qualified companies can get a reduced corporate tax rate of 15% instead of the current 28% rate (SARS, 2018). Furthermore, companies could get an accelerated depreciation allowance of 10% on cost of any new and unused buildings or improvement owned by the qualifying company (SARS, 2018). Morocco, in comparison, has seven Special Economic Zones, with no corporate taxes for the first five years and significantly reduced rates thereafter (Böhmer, 2011). In Morocco, companies have exemption from building and equipment tax for the first 15 years, and goods entering or leaving the SEZ are not subject to laws on foreign exchange. Companies are also exempted from dividends and share taxes when paid to non-residents and a low tax rate of 7.5% if they are paid to locals. Morocco has built a successful aeronautics industry through attracting global aeronautics players to manufacture for export in the country – with the export industry now accounting for US$2 billion in export revenues. It is critical that SEZ industries are linked to the local enterprises – through market opportunities, access to finance, technology, and training (Rifaoui, 2021). Morocco has focused on building full industry ecosystems in the SEZs, using the SEZs to develop an export manufacturing sector in very specific areas. The country has, importantly, ensured that all the firms in the SEZs are industrially interconnected, linked to local players, and the products linked to global supply chains. In South Africa, Coega, after a slow start, has increasingly fostered linkages with local SMMEs. During the 2015-2020 period, there was a 35% SMME procurement participation rate (Coega, 2020). The Hamriyah Free Zone in Sharjah, in the United Arab Emirates, incorporates fiscal incentives, which include complete exemption from taxes, customs and commercial levies; and financial incentives, which include low rents and subsidised energy (Böhmer, 2011). Many global firms want infrastructure incentives to invest in SEZs (Rodríguez-Pose et al, 2022). South Africa not only generally does not offer generous infrastructure incentives, but the country’s infrastructure – power, rail, and ports – is also deteriorating, which is actually a disincentive to attract investors for local SEZs. The success so far of the Tshwane SEZ is instructive for other SEZs in South Africa. The Tshwane Automotive SEZ launched in 2019 was initiated by government securing a private sector anchor investor first – the Ford Motor Company – rather than government being the anchor investor. The Tshwane SEZ is co-governed in a genuine public-private partnership. Most SEZs in South Africa have been state-led and started without a private sector anchor investor. In the Tshwane SEZ, Ford, the national and provincial governments, and the City of Tshwane have been co-governing the SEZ in a public-private partnership from the start. Ford is represented on the management board of the entity, which includes representatives of the dtic, Gauteng Department of Economic Development, and the City of Tshwane. The SEZ has been given clean audits since its inception, and the government has spent R2 billion on the project. In South Africa, SEZs have not been integrated into a long-term development plan, industrialisation, or growth plan. Such a plan must be based on an analysis of the state of the country’s economy, its development needs, and its human capital. Related to this, there has to be a comprehensive analysis of the country’s comparative position in the global economy, trade, and supply chains. In fact, most of the SEZs in South Africa have been set up for ad hoc policy objectives, either by national or provincial governments, such as only job creation or only attracting foreign investment. Many of South Africa’s SEZs operate largely as enclaves, disconnected from the national economy and local businesses. Investors in SEZs are insufficiently linked to local suppliers. There are often no special efforts to strengthen the capacity of local suppliers who may not have the capacity to deliver inputs to foreign companies in the SEZs. For another, SEZs also often do not integrate primary, secondary, and tertiary industries into the investor supply chain. SEZs have also not been able to effectively upgrade South Africa’s skills, industrial and technology bases. Unlike in China, Singapore, or Taiwan, African SEZs also often do not integrate the boosting of research and development into the industrial value chains of companies in the SEZs. The technical learning, knowledge transfer and industrial upgrading in South African SEZs has therefore not been as effective as it has been in many Chinese, South Korean or Singaporean SEZs. This means that the positive spillover effects of SEZs are absent. The problem for South Africa is that SEZs have not delivered the volume of export manufacturing, value add production or employment as expected. Neva Makgetla writes that national government transfers to SEZs amounted to R1.1 billion in 2020-2021, from R600 million in 2013-2014, and after a peak of R1.7 billion in 2017-2018. However, Makgetla rightly says that these figures excluded provincial transfers, which for example in the Eastern Cape ran up to R500 million a year (Makgetla, 2021). According to the dtic figures, in 2021, Coega accounted for half of the private investment to SEZs, the East London IDZ accounted for 20% and the Dube Trade Port for 10% (dtic, 2021; Makgetla, 2021). Over the 2013 to 2019 period, manufacturing employment dropped by 3.7% and valued added manufacturing only rose 0.7% (Makgetla, 2021). Many of South Africa’s SEZs have frequently faced opposition because they were constructed on sites where local residents were forced off their land; or they were constructed without being sensitive to the environment (Buthelezi, 2022). This has often caused the SEZs to face community, court, and civil society challenges – making it difficult for them to get off the ground. There really needs to be greater consultation and involvement of local communities and environmental safeguards when sites for SEZs are identified. Conclusion The location of SEZs is no longer a comparative advantage, which means that SEZs will have to be internationally competitive. SEZs can only be successful and competitive if they are a well-thought-out part of a national development, growth, and industrial plan. There must be a business case for SEZs, based on the country’s comparative advantages, and they must be internationally and locally competitive. They have to be governed competently, honestly, and according to consistently implemented laws. SEZs have to be closely monitored, benchmarked, and have clear goals. They must be held accountable for their performance, and if they fail, they may have to in some cases be reduced as SEZs. They must also operate in ways that safeguard the environment, use green technology, and uphold human rights. SEZs must resolve Africa’s industrialisation challenges, including the inability since colonialism and apartheid to link African products to global value chains. In addition, Africa has not only struggled to add value to its primary commodities, but has also struggled to build manufacturing, diversify product offerings, and produce export industries. Africa has been unable to secure new technology, knowledge, and skills. The reality is that unless SEZs can help African countries accomplish all these important tasks, there is no business case to establish them. 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Chinese Investments in Special Economic Zones in Africa: Progress, Challenges, and Lessons Learned. Washington, DC: World Bank. Yeung, Y. M., Lee, J., & Kee, G. 2009. China’s special economic zones at 30, Eurasian Geography and Economics, 50(2): 222-240. Zeng, D.Z. 2012. China’s Special Economic Zones and Industrial Clusters: Success and Challenges, Lincoln Institute of Land Policy. Zeng, D.Z. 2017. Special Economic Zones: Lessons from the Global Experience, PEDL Synthesis Paper Series, 1. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

The eight parties to the Multi-Party Charter invited a wide range of civil society organisations to get input as to what civil society expect from the Charter. This engagement was held on 28 November 2023 at the Birchwood Hotel in Boksburg. The Inclusive Society Institute (ISI) attended the meeting in order to gain a deeper understanding as to the objectives and policy approaches of the Charter. It was noted that the individual parties would continue to campaign independently, and that the Charter was in effect a pre-election coalition agreement. The Charter does not have its own set of policies, but have agreed a set of principles around which a government programme should be designed. The ISI will continue to monitor the developments within the Charter.

The Inclusive Society Institute (ISI) participated in the CiviNovis/School for Social Innovation/Konrad Adenauer Stiftung Masterclass on Coalition Governance, which was held at the Dutch Reformed Church Hall in Bellville Cape Town on 7 and 8 November 2023. The ISI was represented by its Chief Executive Officer, Daryl Swanepoel. The workshop entailed the garnering of a deeper understanding of the current state of affairs regarding coalitions in South Africa, case studies and group discussions. It also explored coalitions that count, that is a focus in ethical practices, and resilience through mindful compassion. It also considered future perspectives apropos coalitions in the country.

The National Planning Commission [NPC] held a Consultation Session on the Social Cohesion Framework on Thursday, 23 November 2023. The Inclusive Society Institute was represented by its Chief Executive Officer, Mr Daryl Swanepoel. A presentation was made by Commissioner Abba Omar with regard to the Social Cohesion Framework Document (click here for framework document / click here for presentation), and the Department of Sports, Arts and Culture presented their Revised National Strategy for Social Cohesion and the National Social Compact for Social Cohesion and Nation Building. Included in the NPC’s strategy is the establishment of a Social Cohesion & Reconciliation Committee, which will be multiparty in nature, and a Social Cohesion & Reconciliation Council which will be composed of NPOs, relevant research organisations, Labour, Business, the Office of the Deputy president, key departments and Chapter 9 Institutions.

The CEO of the Inclusive Society Institute (ISI) visited Constructor University in Bremen, Germany, on Monday, 20 November 2023, where he met with Professor Klaus Boehnke, an international expert on measuring social cohesion in countries. The ISI and Professor Boehnke intend to work together in the development of a Social Cohesion Radar for South Africa. The Isi is of the view that social cohesion in South Africa is slipping, and that raising awareness and programmes aimed at enhancing reconciliation and nation-building in the country needs more urgent focus and attention than the current experience. Social cohesion is by no means a nice to have. It is an economic imperative. Research indicates that countries with a high level of social cohesion tend to have a higher level of economic growth when compared with countries that experience low social cohesion. Similarly, social stability is promoted through high levels of social cohesion. The six-month project will be launched in January 2024.

The Inclusive Society Institute's study trip to Denmark, 14 - 17 November 2023, was a pivotal endeavour in understanding the Danish labour business compact, aimed at enriching inclusivity efforts in South Africa. The delegation, comprising Zingiswa Losi (COSATU President), Susan Khumalo (Deputy President, SACTWU), Matthew Parks (COSATU Parliamentary Coordinator), Khulekani Noel Mathe (Deputy CEO, BUSA), Jahni de Villiers (Vice Chairperson, Social Policy Dept., BUSA), Michael James Lawrence (Executive Director, NCRF), Daryl Swanepoel (CEO, Inclusive Society Institute) and Nicola Bruns (Coordinator and Researcher, Inclusive Society Institute) engaged in a series of enlightening meetings. Their interactions spanned from a meeting with Ms. Sofie Holme Andersen at Arbejdernes Landsbank to insights from former Finance Minister Mogens Lykketoft, enhancing their understanding of Denmark's social and economic frameworks. Highlights included a session at Danish Industry, organised by Clara Halvorsen, and a deep dive into labour relations with Jesper Nielsen, Head of Department at 3F United Federation of Danish Workers. The trip also featured a culturally enriching visit to the Workers' Museum, offering a glimpse into the history of Denmark's labour movement. These diverse experiences are set to significantly contribute to the Institute's mission of fostering a more inclusive society in South Africa.

Copyright © 2023 Inclusive Society Institute 50 Long Street Cape Town, 8001 South Africa Registration: 235-515 NPO All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute DISCLAIMER Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members. All records and findings included in this report, originate from a panel discussion on developing a new economic blueprint for South Africa, which took place in August 2022 Author: Mariaan Webb, Creamer Media Writer Edited by: Daryl Swanepoel This report has been enabled through the generous support of ASLA Contents 1. Abbreviations & acronyms 2. Introduction 3. Market dynamics and trends 4. Mechanisms to support infrastructure investment 5. Challenges in infrastructure investment 5.1 Ineffective State institutions 5.2 Failure to implement programmes 5.3 SoE financial constraints 5.4 Budget underspending 5.5 Inappropriate SCM and procurement practices 5.6 Tardy tender processes 5.7 Delivery performance deficiencies 5.8 Construction mafia 6. Recommendations 6.1 Support rebuilding State capacity 6.2 Professionalise the public service 6.3 Elevate project leadership 6.4 Transform supply chain management 6.5 Reimagine procurement 6.6 Establish effective delivery management systems 6.7 Prioritise value for money 6.8 Delegate essential functions 6.9 Leverage the private sector 6.10 Boost construction confidence 6.11 Tackle the construction mafia 7. Conclusion 8. References 1. Abbreviations & acronyms GDP gross domestic product GFCF gross-fixed capital formation IRC Infrastructure Report Card ISI Inclusive Society Institute JSE Johannesburg Stock Exchange MFMA Municipal Finance Management Act MTEF medium-term expenditure framework NDP National Development Plan PFMA Public Finance Management Act PPP public-private partnership Sanral South African National Roads Agency Limited SCM supply chain management SoE State-owned enterprise 2. Introduction South African economic growth has languished in the aftermath of the 2008 global economic crisis, persisting in a state of fragility, owing to a combination of global and domestic factors. Globally, the past 15 years has seen long periods of low commodity prices and devastating shocks including the Covid pandemic and the war in Ukraine. Domestically, challenges such as chronic power shortages, a faltering transportation infrastructure, particularly within the freight logistics system, and alarmingly elevated crime rates, have collectively imposed substantial impediments to the investment necessary for sustainable economic growth. The construction industry ought to be a cornerstone upon which the foundation of the economy is laid. However, the current state of the sector in South Africa falls short of the vigour and vitality it has historically possessed. The contribution of industry – comprising mining, manufacturing and construction – to gross domestic product (GDP) has been declining steadily in the last three decades, from 31.2% in 1994 to 24.4% in 2022 (World Bank, 2023). The prolonged underperformance can be traced back to a range of factors, including subdued investment levels, diminished confidence, unsustainable undercutting on tender prices and a surge in organised crime activities (Treasury, 2023). As part of its economic research, the Inclusive Society Institute (ISI) has undertaken an extensive series of dialogues with various sectors of the economy, which reveal the need for attention to three areas to propel the nation towards economic prosperity. These areas are electricity; economic infrastructure; and the troubling issue of youth unemployment. Addressing these three components should act as a catalyst, setting in motion a chain reaction to rebuild the economy. Recognising the need for innovative solutions, the Institute is actively engaged in economic modelling to assess macroeconomic proposals for financing infrastructure development. South Africa’s current economic model falls short of delivering the quantum leap required to revitalise and upgrade infrastructure, especially in a country with a growing population, high unemployment and sluggish economic growth. The unemployment rate was recorded at 32.6% (narrow definition) in the second quarter of 2023, with 7.92-million people unemployed. According to an expanded definition of unemployment that includes those discouraged from seeking work, 42.1% of the labour force was jobless in April to June 2023. In a reflection of how the past decade’s anaemic growth has affected joblessness, nearly three-million more people have become unemployed since the second quarter of 2013 (Statistics South Africa, 2023a). Economic growth is hovering below 2%, a pace insufficient to make significant strides towards achieving economic objectives. Despite reaching a peak of R4.6-trillion in 2022, the economy has only managed 0.3% growth since the prepandemic figure of R4.58-trillion. This growth lags the 3.5% rise in the country’s population over the same period (Statistics South Africa, 2023b). According to Statistics South Africa, six industries are still struggling to regain their prepandemic production levels. Among them, the construction sector finds itself in the most dire situation, remaining 23.1% smaller than what it was before the pandemic. To compound its woes, the construction industry’s decline predates the onset of Covid-19. Indeed, 2022 marked the sixth consecutive year of economic contraction for the sector, rendering it a mere shadow of its former self (Statistics South Africa, 2023b). The persistent economic stagnation in South Africa is significantly exacerbated by infrastructural challenges, most notably within the beleaguered rail sector. Chronic underinvestment and mismanagement have contributed to a dramatic collapse in services. Statistics reveal the severity of the situation, with the volume of freight transported by rail plummeting by 31% since 2017. Inefficiencies stemming from these rail woes are estimated to have imposed a cost of R250-billion on the economy in 2022 alone. Passenger rail services have not been immune to the challenges plaguing the rail system. In 2015, there were about 500-million Metrorail passenger trips, a figure that had plummeted to a mere 8.56-million in 2021 (Swanepoel, 2023). The ISI’s research underscores a critical imperative: for South Africa’s economy to achieve meaningful progress, it must aspire to growth rates of at least 4% to 5%. The current status quo is untenable and simply relying solely on anti-corruption measures and basic reforms will not suffice to attain higher economic growth. The Institute is conducting dialogues with diverse sectors to glean insights and perspectives aimed at accelerating economic growth. During its recent summit with the construction industry, the ISI delved into the development requirements for both social and economic infrastructure, which are pivotal in reshaping the trajectory of the South African economy. Additionally, the summit explored strategies for positioning the construction industry optimally to meet the demands and deliver the urgency needed. 3. Market dynamics and trends The construction industry in South Africa has undergone a dramatic change in the past 15 years, transitioning from a powerhouse to a struggling industry. In the early 2000s, blue-chip construction companies were among the top performers on the Johannesburg Stock Exchange (JSE), raking in significant profits. However, the once-thriving sector has seen its fortunes decline sharply. Some companies have collapsed, while others exited the industry altogether. Basil Read and Group Five, once prominent names, have faced financial crises and eventually collapsed. Murray & Roberts shifted its focus away from construction and entered the oil and gas engineering services sector, while Aveng narrowly survived a financial crisis. Today, WBHO is the biggest construction company on the JSE. The sector’s downturn can be attributed in part to the government’s failure to deliver on promised infrastructure projects. WBHO says in its 2022 Annual Report that the rollout of the R800-billion infrastructure development plan announced in the 2021 Budget had gained little traction, particularly following the cancellation of major projects by the South African National Roads Agency Limited (Sanral) during that year. Sanral in May 2022 cancelled and ordered the retendering of construction projects worth R17.4-billion, owing to what it claimed was a material irregularity in the tender process. By November, four of the five tenders had been re-awarded, with tenders worth R6.65-billion going to joint ventures led by foreign contractors. Despite facing fiscal constraints, South Africa continues to increase the budget allocation for infrastructure every year in a bid to direct public spending towards productive capital investment. In the 2023 Budget, the Finance Minister detailed a R903-billion infrastructure plan for the medium term, of which R351-billion will be spent on transport and logistics infrastructure, including roads, and R133-billion on water infrastructure. High levels of capital investment, or gross fixed capital formation (GFCF), typically indicate a positive outlook for future economic growth, while low levels of investment can be seen as a sign of stagnation or declining confidence. Low levels of economic growth have dampened both public and private-sector fixed capital investment, including investments in the construction industry. Although GFCF recovered to 14% of GDP in 2022, from a low of 13% in 2021, investment remains well below the National Development Plan: Vision 2030 (NDP) target of 30% by 2030 (Masondo, 2023). Investment in infrastructure has a high output multiplier effect, or significant impact on the overall economy. The construction industry, in particular, has a strong ability to create additional economic output and jobs, especially for unskilled workers. Public and private sector capital investment as a share of GDP falls below NDP target Source: 2023 Budget Review Achieving the NDP objective hinges significantly on investments made by the public sector, including State-owned enterprises (SoEs). However, public sector spending has experienced a notable decline, plummeting from 7.3% of GDP in 2015, to a mere 5.4% of GDP in 2019 (Masondo, 2023). Beyond statistics, the gradual decline in GFCF, especially in public sector investments, has tangible repercussions. It is felt in a lack of investment in crucial areas, such as rail, ports, water infrastructure, sanitation, public transport, electricity and housing. This deficiency disrupts the synergy between public and private capital formation. An increase in public infrastructure raises the productivity of private capital, as public capital is a complement to private capital. Higher private capital increases the productivity of labour and leads to higher wages, which encourages more work and incentivise higher investment in private capital. Source: SAICE 2022 Infrastructure Report Card for South Africa The contraction in investment can be attributed to a range of factors, encompassing a general shortage of fiscal capacity within the government, underspending of allocated budgets for infrastructure projects, protracted delays in the awarding and completion of infrastructure contracts and the acute financial constraints confronting SoEs, such as power utility Eskom and freight logistics group Transnet. 4. Mechanisms to support infrastructure investment The statistics concerning gross-fixed capital formation (GCCF) present a sobering outlook for South Africa. Nevertheless, there are grounds for optimism regarding the potential resurgence of investment in the coming years. Deputy Finance Minister David Masondo has identified several mechanisms that could serve as catalysts for this revitalisation. Infrastructure Fund: With large-scale investment touted as the tried and tested way to boost economies in the short term, the Infrastructure Fund was created in 2019 to address the need for blended finance to enable the efficient execution of infrastructure programmes and projects in South Africa. Currently housed in the Development Bank of Southern Africa, the Infrastructure Fund’s aim is to transform public infrastructure through blended financing solutions by sourcing and blending capital from the private sector, institutional investors, development finance institutions and multilateral development banks. Pension investments: Regulation 28 of the Pension Fund Act has been amended to allow institutional fund managers to invest more in assets such as infrastructure. The aim of the amendment is to explicitly enable pension funds to invest in infrastructure such as roads, renewable energy and ports. To this extent, the amendments introduce a definition of infrastructure as an asset class and set a limit of 45% exposure in South African infrastructure investment. The setting of such a maximum limit was regarded as a more ‘market-friendly’ response to calls for the introduction of ‘prescribed asset requirements’, which would have set a minimum level for pension fund investment in infrastructure projects. Division of Revenue Amendments Act: Through the 2022 Division of Revenue Amendments Act, government has enabled provincial governments to pledge their infrastructure grants to leverage more financing to fast-track the rollout of infrastructure. Pledging effectively is a means by which a province secures a loan through borrowing with a view of using or issuing a guarantee, indemnity or security as the conditional grant for the repayment of that loan. The conditional grant or portion of the conditional grant for the current financial year’s allocation and future financial years’ indicative allocations for the province are committed towards the repayment of the loan taken. Public-private partnerships (PPPs): Following a slowdown of PPPs, government has initiated a review to consider lessons learned from the application of the current PPP framework over the past eight years. The review found that there are too many steps and multiple approval bottlenecks. A lack of capacity, especially at the municipal level, led to reduced uptake for PPP projects. PPP regulations also applied to all projects, regardless of size. At national level, an incongruency between budget cycle and the PPP planning time has been highlighted. Masondo has said that a uniform planning tool for all infrastructure will be implemented and that this will mainstream the PPP cycle to link up with the Budget process. Further, while the review found that there is no need for a complete overhaul of the PPP legal and regulatory framework, some lengthy approval processes will be changed to speed up project implementation. Budget allocation: Government uses Budget allocations to support fixed capital formation. Overall, R903-billion will be spent on infrastructure projects over the medium-term expenditure framework. 5. Challenges in infrastructure investment 5.1 Ineffective State institutions Despite substantial allocations, executing infrastructure programmes often have poor outcomes, owing to ineffective State institutions. Given the substantial mandate and resources at its disposal, the State’s underperformance raises serious concerns. The capacity and credibility of South Africa’s institutions were significantly undermined during the tenure of the Jacob Zuma administration. While the Cyril Ramaphosa administration is making concerted efforts to enhance various aspects of the State, the process of recovery is anticipated to be protracted. One of the detrimental outcomes of State capture is nepotism, resulting in the appointment of unqualified individuals, especially at municipal level. 5.2 Failure to implement programmes The government’s inability to effectively implement its own programmes, as is evident in the National Development Plan: Vision 2030 (NDP), is akin to a corporate CEO failing to execute any part of a strategic vision, a situation that typically results in career repercussions. The Public Sector seems immune from such repercussions. The NDP seeks to address the triple challenges of poverty, unemployment and inequality. A recent ten-year review of the progress made since the adoption of the NDP in 2012 indicates that the vision for the future expressed in the plan has not materialised over the past decade. Significant strides were made in poverty reduction between 2006 and 2011, with the poverty rate declining from 51% to 36.4%, but subsequent years have witnessed a troubling reversal of the trend, with income poverty resurging to 40% by 2016 (National Planning Commission, 2023). South Africa is also falling short of its targets for reducing inequality targets as outlined in the NDP. The NDP’s aim is to achieve greater income equality by decreasing the Gini coefficient (measured by income) from 0.69 in 2010 to 0.60 by 2030. Inequality rose substantially between 1994 and 2006, with the Gini coefficient expanding by about 0.05 points. Although millions were lifted out of abject poverty between 2006 and 2015, more substantial benefits skewed towards higher income groups. While there was a brief reduction in inequality between 2006 and 2009, no substantial progress has been made since then (National Planning Commission, 2023). Meeting the NDP’s unemployment reduction targets appears increasingly unlikely, mainly owing to persistently low and sluggish economic growth. The NDP originally aimed to slash unemployment from 35.4% in 2010, to 20% by 2015, 14% by 2020, and 6% by 2030. The initial goal for 2015 necessitated the creation of 2.2-million jobs between 2010 and 2015, equating to an average of 436 000 jobs a year. Achieving this would have relied on an average gross domestic product (GDP) growth rate of 4.6% a year. The rate of job creation between 2010 and 2015 was robust and created the required jobs. However, as GDP growth slowed, job creation dwindled, with only 364 000 jobs created between 2015 and 2017. The interim milestone would have required employment to reach 16.8-million, but instead, it only reached 16.2-million (National Planning Commission, 2023H). The challenges in meeting the NDP unemployment reduction targets are closely linked to the broader economic landscape in South Africa, including the construction industry’s employment-creation role. The industry is historically known for being a major employer, especially for low-skilled and semi-skilled workers. However, the prevailing sluggish economic growth in South Africa has had a detrimental impact. It has caused delays in construction projects or a reduction in scale, limiting the number of job opportunities available within the industry. Budget constraints in public infrastructure spending have further hampered industry’s ability to serve as a substantial source of employment. According to Statistics South Africa, there were 118 000 construction job losses between June 2017 and June 2020. The total number of persons employed at the end of June 2020 amounted to 473 000 – a 20% decrease when compared with the workforce tally at the end of June 2017, which stood at 592 000. Notably, substantial declines were observed in both the civil engineering structures and buildings segments of the industry (Statistics South Africa, 2022). In 2023, investment in renewable energy projects has begun to show signs of the situation beginning to turn around for the South African construction sector. 5.3 SoE financial constraints The financial constraints facing State-owned enterprises (SoEs) have a detrimental impact on infrastructure development in the country. These constraints limit the government’s ability to allocate funds to critical projects and maintenance, hindering the overall effectiveness of infrastructure development initiatives. While the recapitalisation of SoEs is a positive development, the efficacy of these institutions relies heavily on the appointment of competent board members and the establishment of clear roles and responsibilities. Failing to differentiate between the roles of board and Ministerial functions lead to confusion and overlap in decision-making. 5.4 Budget underspending Government has repeatedly expressed its commitment to expanding infrastructure delivery. In the 2023 Budget, it has increased expenditure across various facets of public infrastructure. A significant portion is allocated to national roads, amounting to R48-billion a year over the 2019 to 2024 medium-term expenditure framework (MTEF). Additionally, provisions for the maintenance of provincial roads amount to another R12-billion a year. It is important to note that this budgetary growth lags the inflation rate. The budget for local and regional water infrastructure has grown rapidly, increasing from R8-billion in 2019 to a planned R17.1-billion in 2025. Spending on national water infrastructure is smaller at around R3.5-billion a year on average over the MTEF. In ontrast, spending on human settlements infrastructure is stagnant. Provinces spent R20-billion on housing in 2017, yet by 2025, the Budget plans only R20.5-billion (Sachs et al, 2023). Despite increased allocations, SoEs and public entities consistently fall short of effectively using their budget. Although not a phenomenon unique to South Africa, as literature shows that other countries also struggle with the same issue, chronic budget underspending has far-reaching implications, contributing to project delays, stunted economic growth and diminished opportunities for the construction industry. Between 2015/16 and 2017/18, SoEs and public entities spent less than 75% and 65% of their infrastructure budgets, respectively. The State as a whole spent less than 85% of its available infrastructure budget (Altman, 2023). The core of the underspending issue lies in complex procurement processes, notably relating to noncompliance with supply chain management (SCM) policy and regulations, alongside insufficient monitoring and evaluation of SCM policy adherence (Jantjies, 2023). 5.5 Inappropriate SCM and procurement practices The challenges associated with SCM and procurement within the public sector have been widely documented, underscoring the urgency of addressing this issue. One of the biggest problems of procurement is its design. Under the Public Finance Management Act (PFMA) and the Municipal Finance Management Act (MFMA), an accounting officer or accounting authority is mandated to establish a SCM unit within the office of an institution’s chief financial officer for SCM implementation. The current system places a disproportionate emphasis on financial management, neglecting the critical aspect of efficient project delivery. It has downgraded procurement into an administrative function. The PFMA and MFMA view procurement solely as part of SCM. The current public procurement system emphasises compliance checklists. The focus should include delivering value for money, a strategy that inherently reduces the scope for corruption. This reframing of the procurement processes is important for building trust with suppliers. The current SCM system constrains procuring institutions from effectively managing the interdependencies between contracts. The lack of control over the procurement process, including appointments, creates challenges. This misalignment with the PFMA and the MFMA further exacerbates the issue. Additionally, the system separates institutional decision-making from specialised professionals, such as built environment professionals, allowing individuals with clerical roles to manipulate the entire process. A shift towards value for money and integrating professional expertise could significantly change the current circumstances. 5.6 Tardy tender processes Most of the public sector tenders issued are not being awarded, leaving them in a state of pending or cancelled. National Treasury’s database shows that between September 2022 and September 2023, 64 091 tenders have been published across all spheres of government and that 16 253 have been awarded (Treasury, 2023b). What compounds the issue is the prolonged period it takes for these tenders to be awarded, which poses significant challenges for resource planning. 5.7 Delivery performance deficiencies Alongside underspending, numerous instances of cost overruns, delayed delivery and subpar value for money have been observed. Examples of overbudget projects are well documented and include the Gautrain Rapid Rail System (original budget: R6.8-billion, final cost: R25.2-billion), Transnet’s New Multi-Product Pipeline (original budget: R12.7-billion, final cost: R30.4-billion) and the Medupi and Kusile power stations, among others. 5.8 Construction mafia The construction mafia, or so-called ‘business forums’, first reared its head in KwaZulu-Natal in 2014 and 2015, invading construction sites to demand a share of projects, or that companies employ specific people or subcontractors. By 2018 and 2019, the practice also emerged in other provinces, with these forums often touting heavy-calibre weapons as they made their demands. A similar model of extortion has since spread to other industries, most notably mining. Much of the violence has subsided in KwaZulu-Natal, but it does not mean that illegal activities have stopped. Rather, extortion has become normalised and yet another cost of doing business in South Africa (Venter, 2023). Different interpretations of laws and regulations regarding localisation have created room for this criminal element to develop. Business forums are demanding 30% of the contract value be allocated to forum members, or directly to the forum itself. This figure appears to be derived from the National Treasury’s Preferential Procurement Policy Framework Act. The Act states that 30% of public procurement contracts should be contracted to designated groups, as provided for in the Preferential Procurement Regulations. National Treasury has condemned this practice as illegal (Venter, 2023). While law enforcement undoubtedly plays a role in addressing the problem, it is equally imperative to acknowledge that the rise of these mafias can be attributed to the inadequacy of effectively empowering local communities. The situation has been exacerbated by the lack of robust local government institutions equipped to handle conflict resolution, compounded by the opportunistic actions of certain local political leaders. This complex dynamic mirrors the fragmented state of politics in South Africa, where not only is the ruling party, the African National Congress, facing internal challenges, but fragmentation is also prevalent among opposition parties. 6. Recommendations 6.1 Support rebuilding State capacity The construction industry must maintain its commitment to supporting government to enhance capacity and ensure its specialised involvement in initiatives such as certification requirements and institutional strengthening. The construction industry must actively participate in national drives, such as the CEOs Pledge, to help improve State capacity. It is a collective decision to make a difference and to focus on actions that can bring about change. Industry leaders are encouraged to actively engage, to adopt a positive mindset and to refrain from mere criticism. For those with extensive experience, it is an opportune time to lend a hand and assist in execution, provided such support is welcomed. Robust executive management and technical proficiency within the State and its entities will foster stability and empower them to lead and execute with confidence. A particular emphasis must be given to developing state capacity for project design and execution. 6.2 Professionalise the public service Professionalise the public sector by investing in skilled and experienced public servants to enhance delivery outcomes. Employ professionals registered with built-environment bodies and councils. A professional public service cohort will ensure projects are managed more efficiently, transparently and comply with best practices. Addressing the issue of unqualified employees, especially at municipal level, requires an independent forensic audit of CVs to ensure qualifications and experience are accurate. Swift action, such as immediate dismissal for falsified credentials, can remedy the problem and allow for the recruitment of qualified personnel. While skills shortages exist in many municipalities, this issue is fixable. 6.3 Elevate project leadership Client delivery managers, possessing the requisite certifications and expertise, should spearhead infrastructure projects. This will ensure not only streamlined execution, but also establish a single point of accountability. 6.4 Transform supply chain management Transform infrastructure supply chain management (SCM) into a strategic function, shifting its role from being merely a clerical back office or financial/administrative task. By recognising SCM as a strategic driver, it becomes a crucial element in project planning, execution and success. 6.5 Reimagine procurement Infrastructure procurement should be decoupled from centralised purchasing systems. Instead, it should be overseen by a dedicated chief procurement officer or a high-level office specifically designated and equipped with a team of built environment professionals. This approach ensures that procurement processes are tailored to the unique demands of infrastructure projects, fostering efficiency, transparency and optimal project outcomes. 6.6 Establish effective delivery management systems To effectively implement the National Infrastructure Plan 2050, clients must put in place procurement and delivery management systems that provide governance processes. Establish clear delegations of authority to enable timeous decision-making and individual or organisational accountability for infrastructure delivery. Provide for the assignment of single-point accountability to a suitably qualified and experienced built environment practitioner to provide executive level leadership in the planning, specifying, procuring and overseeing functions. Recognise that infrastructure procurement is a central competency of those responsible for delivering infrastructure. 6.7 Prioritise value for money Prioritise ‘value for money’ over ‘least-cost’ considerations throughout the project lifecycle, recognising that a strategic approach not only enhances the project’s immediate performance, but also ensures long-term sustainability and benefits for all stakeholders. This shift in focus allows for comprehensive planning, robust risk management and the creation of infrastructure that truly serves the country’s needs. 6.8 Delegate essential functions Government entities incapable of efficiently spending their budgets should be mandated to delegate essential functions to other capable organs of State. This approach is particularly relevant in instances such as municipal water management, where a monopoly function exists, but the existing State entity struggles to fulfil its responsibilities. 6.9 Leverage the private sector In a shift from outdated government infrastructure ideologies, it is suggested that private sector efficiencies should be leveraged. Although it may challenge prevailing government norms, privatising key infrastructure assets, such as the coal line from Mpumalanga to Richards Bay, KwaZulu-Natal, has the potential to accelerate much-needed improvements, potentially addressing issues within a shorter time frame. A framework should also be developed to facilitate large-scale private sector investment in the country’s electricity transmission grid. The public-private partnership model must be streamlined for improved feasibility and user-friendliness. 6.10 Boost construction confidence While government-led infrastructure projects play a pivotal role in stimulating the construction industry, the contribution of private sector capital formation is equally indispensable. Rebuilding confidence in South Africa, its leadership, and its economic prospects is imperative to catalyse growth in the commercial and residential building and construction sectors. 6.11 Tackle the construction mafia Differentiate between genuine community concerns and criminals involved in extortion for their own gain. While law enforcement must be mandated to deal effectively with criminal elements, it is essential that local government institutions step up to the plate and take responsibility for negotiating mutually beneficial solutions. 7. Conclusion The decline of the South African construction sector is symptomatic of broader economic stagnation, characterised by inadequate investment levels, dwindling confidence and a surge in organised crime activities. To move forward, a multifaceted approach is needed. Policy changes must prioritise development of State capacity, professionalisation of the public service and transformation of supply chain management and procurement practices. These changes will create an environment for efficient project design and execution. Further, addressing the challenges posed by the construction mafia demands urgent attention. Collaborative efforts between government, industry and community stakeholders, as well as law enforcement, are necessary to combat the problem. Efforts should also be directed towards enhancing economic infrastructure, particularly railway infrastructure, and effectively addressing the prevailing energy crisis. Embracing opportunities presented by ongoing large-scale investments in renewable energy projects can be a cornerstone for industry revival. The removal of the 100 MW cap on private energy generation has resulted in a strong uptick in construction activity, as would planned investment in the country’s national electricity transmission grid. Given that economic growth is stifled due to the lack of funding, creative and innovative funding mechanisms need to be developed to fast-track economic infrastructure development. Public Private Partnerships (PPPs) and Build Operate Transfer (BOT) need to be deployed at a far larger scale. The government should revisit its public debt to GDP policy, by being more flexible with regard to higher debt levels attached to infrastructure investment. Given the economic urgency, special legislation similar to that during the 2010 Soccer World Cup ought to be considered to fast-track a major overhaul of the country’s economic infrastructure. Further research and economic modelling in this regard is recommended. 8. References Altman, M. 2023. The infrastructure drive in SA and the potential for greater construction sector dynamism, August 5, 2023. Cape Town. Jantjies, D. 2023. Government underspending analysis 2011/12 to 2022/21: The case studies of the Departments of Health and Social Development, March 2023. [Online]. Available at: https://static.pmg.org.za/2300308March_2023_Government_underspending_analysis_2011_-_2021_the_case_studies_of_the_Departments_of_Health_and_Social_Development.pdf [accessed September 9, 2023]. Masondo, D. 2023. Remarks by Deputy Minister of Finance David Masondo at the Inclusive Society Institute Construction Summit, August 8, 2023. Cape Town. National Planning Commission. 2023. A review of the National Development Plan 2030: Advancing implementation towards a more capable nation, August, 2023. [Online]. Available at: www.nationalplanningcommission.org.za/assets/Documents/NDP%20REVIEW.pdf [accessed September 11, 2023]. National Treasury. 2023. Budget Review, 2023. [Online]. Available at: https://www.treasury.gov.za/documents/national%20budget/2023/review/FullBR.pdf [accessed September 7, 2023]. National Treasury. 2023. eTender, September 9, 2023. [Online]. Available at: https://data.etenders.gov.za [accessed September 9, 2023]. South African Institution of Civil Engineering, 2022. SAICE 2022 Infrastructure Report Card for South Africa, November 2022. [Online]. https://saice.org.za/downloads/SAICE-2022-Infrastructure-Report-Card.pdf [accessed September 10, 2023]. Statistics South Africa. 2022. Construction industry, 2020, June 27, 2020.[Online]. Available at: https://www.statssa.gov.za/?p=1548 [accessed September 7, 2023]. Statistics South Africa. 2023. Quarterly Labour Force Survey, Q2:2023, August 15, 2023. [Online]. Available at: https://www.statssa.gov.za/publications/P0211/P02112ndQuarter2023.pdf[accessed September 7, 2023]. Swanepoel, D. 2023. South Africa country brief: A socio-economic and political prognosis, September 25, 2023. Stockholm. Venter, I. 2023. Is SA Inc fighting the construction mafia, or adapting to incorporate it?,Engineering News, June 27, 2023. [Online]. Available at: https://www.engineeringnews.co.za/article/is-sa-inc-fighting-the-construction-mafia-or-adapting-to-incorporate-it-2023-06-27#:~:text=The%20construction%20mafia%2C%20or%20so,employ%20specific%20people%20or%20subcontractors [accessed September 11, 2023]. World Bank. 2023. National Accounts Data, and OECD National Accounts data files. [Online]. Available at: https://data.worldbank.org/indicator/NV.IND.TOTL.ZS [accessed September 7, 2023]. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This report has been published by the Inclusive Society Institute The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals. Email: info@inclusivesociety.org.za Phone: +27 (0) 21 201 1589 Web: www.inclusivesociety.org.za

On Monday, 30 October 2023, the Inclusive Society Institute briefed a Swedish delegation led by ACCESS Sweden on the state of socio-economic and political affairs in South Africa. The briefing took place at the offices of Deloitte in Cape Town. ACCESS is devoted to building and strengthening the good relations between the peoples of Sweden and South Africa. The delegation visited South Africa for the purposes of carrying out said objective and to learn and inform themselves about the current state of affairs in the country.

Recent polls from various institutes suggest that South Africa is heading for coalition government, possibly at the national level, but certainly at the provincial level of government. To this end, given the long historical experience of coalition governments in Finland, the Inclusive Society Institute (ISI) hosted a panel discussion via webinar on Coalition Government: Lessons from Finland. Following the opening remarks of HE Anne Lamilla, Ambassador of Finland to South Africa, and a presentation of recent party support polling data by ISI CEO Daryl Swanepoel, three prominent experts on Finnish Coalitions, made presentations, which were followed by lively discussions. Ms Liisa Laakso, from the Nordic Africa Institute, spoke on Multi-Party Government: Sharing power or building a coalition? Ms Virva Viljanen, from Demo Finland, spoke on the legal framework and best practices of coalition government in Finland. And Prof Jenni Karimäki, from the University of Helsinki, spoke on Finnish traditions regarding the building and maintenance of coalition government.

The Inclusive Society Institute hosted a panel discussion aimed at assessing the impact of the Construction Mafia on the South African economy. The event was held on 11 October 2023 at the offices of Deloitte in Midrand, Johannesburg. This follows the high-level Construction Summit hosted by the Institute on 8 August 2023 in Cape Town, which included speakers from both the private and public sectors, including a keynote address by the Deputy Minister of Finance, Hon. David Masondo MP. One area identified during the summit requiring further attention was the problem of the ‘Construction Mafia’. It was decided to delve further into this, thus the panel discussion. Speakers included: Mr Webster Mfebe, Chief Executive Officer of the South African Forum for Civil Engineering Contractors Mr Gareth Newham, Head of the Justice and Violence Prevention Programme, Institute of Security Studies Brig Lucas (NL) Ramangwa, Section Head: Special Operations and Investigations, South African Police Service

The 17th International Winelands Conference took place in Stellenbosch on 16, 17 and 18 October 2023. This year’s theme was: “Re-imagining Public Servant Leadership in a post-capture, post-pandemic governance landscape”. The Inclusive Society Institute attended the conference and was represented by Dr Klaus Kotzé who delivered a working paper titled “Re-imagining governance in South Africa: Putting the Constitution first”. The paper recognises governance shortfalls, while seeking to conceptually investigate where we come from in order to better conceive preferable pathways and modalities for future governance. The paper pursues the ongoing work that the Institute is doing to amplify the centrality of Constitutional principles in governance and civil society. It was therefore opportune to present the paper to an audience of practitioners and experts at a conference focusing on public servant leadership, a key principle espoused by the Constitution and amplified in the paper. The conference was hosted Prof Zweli Ndevu, Director: School of Public Leadership at Stellenbosch University and Deputy Chairperson of the Inclusive Society Institute. When asked, Prof Ndevu expressed his utmost satisfaction with the proceedings. He highlighted that it was the variety of speakers, representing different sectors, including academia, the public and civil service that contributed to the event’s success. Various delegates mentioned their appreciation for the critical approach of the conference proceedings, which opened space for creative suggestions to South Africa’s urgent crises. In the final plenary, the Prof Mark Swilling suggested that whereas past conferences called for a global rethink on the role of the state, that this process had now begun in full earnest. The Institute will continue playing an active role in pursuing a unified sense of purpose that places the Constitution central to South African governance.

The Inclusive Society Institute (ISI) led an economic delegation to China with the objective of gaining a deeper understanding of the Belt and Road Initiative (BRI) and the Special Economic Zones regime of China. The delegation attended the Belt and Road CEO Conference that was held on 17 October 2023 at the China National Convention Centre in Beijing. The conference was addressed by a number of high-level speakers including China’s Vice Premier, He Lifeng. The Beijing Declaration of the Belt and Road CEO Conference captured five principles: Adhering to openness and cooperation Deepening connectivity cooperation Adhering to green development Promoting cooperation in the digital economy Adhering to lawful operation and fulfilling…[of enterprises] social responsibility The delegation then travelled to the cities of Xian and Baoji in the Shaanxi province where they inter alia met with the President of the China Council for the Promotion of International Trade Shaanxi province, Madame Ma Yuhong. And in Baoji the CCPIT hosted a Business Seminar, which focussed on Special Economic Zones (SEZs) in Baoji. They also arranged a tour of a number of industries located within the SEZs..