LEGAL UPDATE – TOP THINGS TO KNOW FROM THE SOUTH AFRICAN PRESIDENT’S 2020 SONA

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President Ramaphosa’s 2020 State of the Nation Address sets out an ambitious social, political and economic program with some specific time commitments being given for the first time.

We take a look at some of the top things we think will impact our clients.

Regulating the commercial use of hemp products (Julie Oppenheim)

The President noted that the regulation and commercial use of hemp products will be opened up, providing opportunities for small-scale farmers; and that policy will be formulated on the use of cannabis products for medicinal purposes in line with global trends.

This decision is welcomed as it will open up a number of new markets in the pharmaceutical and industrial fields and it will create a wealth of jobs in a depressed economy. These fields include human food products, animal food products and bedding, clothing and fabric, plastic, construction material, paper, fuel, cosmetics and batteries.

In what was traditionally unlawful territory, it is key for entrepreneurs to understand the regulatory framework clearly so that they can make well-informed decisions about commercialising these untapped markets. 

Fundamental overhaul of the Durban port (Andrew Pike)

The overhaul of Durban harbour to address the congestion issue is vital to the wider economy of the country. With ships being delayed we are seeing congestion surcharges being imposed on various cargoes by shipping lines. These surcharges will of course be passed on to consumers and help fuel inflation.

In addition, container depots in Durban are over-whelmed with demand for space, with shipping lines desperate to store their empty containers anywhere they can. Inevitably, because of the demand for space, this creates a conundrum for both depots and shipping lines and an inclination for depots to take advantage by placing a premium on their storage fees.

Transporters who carry goods, especially containers, for shipment from or to Durban are spending hours, if not days outside the port waiting for their turn to offload or collect containers.

The delays significantly reduce the productivity of the transport vehicles: for instance, where a truck should be able easily to manage four or five trips to and from the port in a day for local deliveries, they are now reduced to one at best. This puts pressure on transport operators who have overheads to pay.

Add to this that buyers and sellers are being adversely affected by delays, with goods not getting to market on time, letters of credit expiring and so on, and one quickly sees that congestion in the port is disastrous for the economy. Any initiative to resolve the management and operational challenges in the port of Durban is to be welcomed.

Africa Continental Free Trade Area (Trudie Nichols)

The Agreement establishing the African Continental Free Trade Area (AfCFTA) is an historic multilateral agreement concluded by the member states of the Africa Union (AU). It entered into force on 30 May 2019.

It is in line with Agenda 2063, which aspires to accelerate intra-Africa Trade and the free movement of goods, people, capital and services across the African Continent in order to strengthen economic integration, and promote agricultural development, food security, industrialisation and structural economic transformation.

It is also aligned to South Africa’s National Development Plan, which has as its strategic objective, the elimination of poverty and the reduction in inequality by 2030. Globally, it is intended to boost Africa’s trading position by strengthening Africa’s common voice in global trade negotiations. It is projected to increase intra-African trade from 2010 levels by 52.3 % by 2022. Higher trade levels facilitate economic growth, transform domestic economies and help the countries achieve the Sustainable Development Goals (SDGs)

President Ramaphosa assumed the chairmanship of the Africa Union for 2020, and Mr Wamkele Mene, has been elected as the first Secretary-General of the AfCFTA.

The discussions and negotiations regarding the rules which will apply to rules of origin, tariffs and the application of open borders to various services and sectors will be intensive, historic and challenging.

The successful implementation of the operational phase of the AfCFTA will have a direct and positive impact on South Africa.

ICASA’s undertaking to conclude licensing of high demand spectrum (Livia Dyer)

In reference to South Africa’s digital economy, the President indicated that ICASA has undertaken to conclude the licensing of high demand spectrum before the end of 2020 – a precursor to the establishment of the Wireless Open Access Network (WOAN) in 2021.

This will afford spectrum constrained mobile network operators expanded opportunities and smaller service providers and new entrants access to capacity on mobile and wireless networks given that licensees who are assigned high-demand spectrum will be subject to open access obligations.

Regarding the Competition Commission’s data market inquiry, the President noted the ongoing negotiations with dominant mobile network operators on securing deep cuts to data prices, a free daily allocation of data and free access to educational and other public interest websites.

The outcome of these negotiations may impact on the licensing of high demand spectrum given that spectrum may be licensed subject to obligations along the lines of what the Commission has proposed.

Water use licences to be issued within 90 days (Wandisile Mandlana)

As noted by the President, water is critical to most of our modern-day economic activities including farming, industrial and mining activities.  In general, several water uses have to be licensed before these water uses could be undertaken. The only exception to the licensing requirement is in circumstances where the prospective water user has another form of entitlement under the National Water Act (e.g. if the use is an existing lawful water use or covered by a General Authorisation (which generally cover the less significant water uses).

Until recently, granting of water use licences took more than five years to process but we have noted some improvement in the decision-making timeline process. Unfortunately, the shortened timeframes are not as low as the 90 days set out in the State of the Nation Address. As a result, Government should continue to find ways to optimise the water licensing decision-making process as most industrial and mining activities may not commence until the correct authorisation is in place.  

Finalising the Climate Change Bill (Wandisile Mandlana)

The Climate Change Bill was published in November 2018. The promise to finalise the Climate Change Bill is therefore highly welcomed. Among others, once passed, the Climate Change Bill is expected to impose mandatory carbon budgets and sectoral emission targets. Unfortunately, the 2018 draft of the Bill did not go far enough to address the severity and urgency of the threat of climate change. Hopefully, the next iteration of the Bill will set out specific actions to reduce greenhouse gas emissions and not just be a framework legislation. We expect the next version of the bill to have clear measures holding emitters and Government accountable and not merely focussing on institutional arrangements which the current draft proposes to establish.