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The Union of South Africa that followed the Boer War (1899-1902) operated under a policy of apartheid - the separate development of the races. The 1990's brought an end to apartheid politically and ushered in black majority rule. Southern Africa as a whole is a very different place than it was two decades ago. Old single-party dictatorships and white minority government have given way to nascent democratic governments with varying degrees of success and maturity. On 10 May 1994, Nelson Mandela took office as the first president of the 'new' South Africa'. His inauguration marked the end of a long struggle to achieve a non-racial political regime and the beginning of an equally difficult and protracted process of state and nation building that is intended to lead eventually to the realisation of a stable democracy. 
The 1990's can be viewed as a success. The diminution of political violence, the relatively peaceful transfer of power, the continuation of the transformation process, albeit painfully slow, can be regarded with pride and promise. The retirement of Mandela as president in 1999 saw the second round of successful majority-rule elections. The succession process was amazingly smooth. Thabo Mbeki was officially named to ANC's candidate for president back in 1997. Mbeki may lack Mandela's charisma, and his capacity for fairness and sensitivity, but his style is different and more efficient and businesslike. Mbeki will remain unchallenged as president in 2002, but the ANC remains deeply divided.
South Africa is the most developed country in southern Africa, and the regional leader economically and politically. But South Africa (and every other country in the region) has its own problems. The political transition from a race-based polity to one based on majority rule is almost complete, yet subject to tensions. Changes have occurred with relatively little violence. Aside from the former Soviet-bloc countries, no nation has experienced greater change than South Africa over the past decade. The non-racial democracy is still in its infancy and still requires nurture and development. 
South Africa has the most sophisticated economy in black Africa. Unlike other African countries its manufacturing sector is relatively advanced. It is the largest sector of the economy, contributing about a quarter of the GDP. Agriculture is also relatively diversified, producing wine, citrus products and wool for export and maize for internal consumption. Agriculture accounts for about 4 percent of the GDP. The population is growing fast at 2.6% pa. In 1999 it totalled 45 million - 76% African, 13% white, 8.5% coloured, and 2.5% Asian. The GNP per head is over $3000 (compared to $300 in Nigeria) but this figure masks inequitable distribution of wealth between the races.
In Southern Africa as a whole, South Africa accounts for less than one-third of the population but for more than 75 percent of the GDP. Its economy is 3.4 times larger than the combined economies of the other members of the Southern African Development Community - SADC (Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Tanzania, Zambia, Zimbabwe). This suggests that South Africa occupies a position in Africa similar to the United States within the global economy. While the United States accounts for 26 percent of global GDP, South Africa accounts for about 44 percent of Africa's GDP. South Africa's economic outreach into and beyond the region grew substantially after the ending of apartheid, and shows every sign of continuing to do so. Many of South Africa's largest conglomerates, banks, and financial institutions have found openings for investment in some twenty countries in Africa. The countries of greatest immediate interest are Angola because of its oil and mineral resources, and the Democratic Republic of the Congo with its huge potential for mining development. 

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Update No: 11 - (03/12/02)

JSE best performing stock market in 2002
The JSE Securities Exchange has been the world's best performing equity market in dollar terms from the start of the year up until close on November 22, according to data compiled by Dow Jones Newswires. Its gain over that period is 33.15% - almost double second-placed Thailand's 17.84% gain and in sharp contrast to the US, which has slumped by 18.93% so far this year. The global index has declined by 16.37%. If the US is excluded from the global index, the performance is a decline of 13.46%. Most of the world has followed the US into negative territory and of the 34 major equity markets, only six were in positive territory. These were: Austria, Indonesia, New Zealand, South Africa, South Korea and Thailand. In rand terms, the JSE all share index is down 7% since the start of the year and is 16.6% below its record high reached on May 22. The rand reached R9.2675 against the dollar November 25, a 17% improvement against the US currency since the start of this year, and a huge 35% improvement on the record worst level of R13.86 reached as recently as December 20, 2001. Because almost half the JSE's market capitalisation consists of rand hedge shares, the stronger rand is leading to losses in the all share index. The International Monetary Fund says poor performances by the world's three largest economies, the United States, European Union and Japan, could boost the rand further. The fund's first deputy managing director, Anne Krueger, says the US economy is not as strong as expected, while the EU and Japan will have to put measures in place to ensure their economies grow. South Africa recorded a 3% growth during the third quarter, and the rand is continuing its recent strong run. 

Consequences of stronger rand
As the rand continued its gains on exporter dollars, some of South Africa's largest companies were beginning to count the costs, saying earnings were likely to be seriously eroded in the months ahead. Finance Minister Trevor Manuel also sounded a note of caution about the possible effect on manufacturing exports and tourism, despite welcoming the currency's gains as "encouraging" for the inflationary outlook. "We do not want nip out the prospect of new export opportunities from this economy," he said. "Tourists (have been) coming in leaps and bounds. If things became more expensive for them, they would stop coming. Yes, we have to be pleased, but watch it." While the currency has been blamed partly for losses on the local stock market, data released by Dow Jones newswire service showed that the JSE Securities Exchange, thanks to the rand's activities, has been by far the world's best-performing exchange in dollar terms this year. Gold mining companies are likely to be among the hardest hit, with analysts warning that revenues could drop by as much as 13% if the currency continues to strengthen or hold its levels. The rand's appreciation is likely to affect the earnings of mining companies when they report in January for the December quarter. Rand strength will also negatively affect the rand gold price, which dictates mining companies' margins. Information technology is a sector expected to benefit as much hardware and software is imported. But Datatec CE Jens Montanana said his company's earnings had been hit badly by the rand's recovery as it earned the majority of its income in dollars but reported its income in rand. 

GDP growth
Economic growth could hit 3% this year, making South Africa one of the best performing economies and exceeding the government's own projections of 2.6%, economists said November 21, after the release of data showing South Africa weathering the global economic slowdown. This solid performance comes amid a gloomy outlook for the global economy, which the Organisation of Economic Co-operations said would average only 1.5% growth this year. Statistics SA emphasised the stimulatory effects of the rand's depreciation last year. Manufacturing emerged as the main driving force, though at a slower pace. However, economists are increasingly worried that competitive advantages could be eroded and manufacturing growth could slow down if the rand continues its recovery, which has seen it gain 25% against the dollar this year. South Africa has also risen in the World Economic Forum's international competitiveness rankings released November 12. In technology rankings South Africa moved from 46th position last year to 38th out of 80 countries this year. This helped South Africa inch up two places to 32 in the overall growth competitiveness rankings, which reflect the potential of the country to generate sustained economic growth. Competitiveness rankings are sometimes used by businesses as one consideration in location decisions and are also useful to policy makers. The US tops the rankings this year, displacing Finland, which is in the number two slot

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BMW a major exporter

BMW South Africa has transformed from a company manufacturing exclusively for the local market to one that not only addresses South African demand but also exports vehicles around the world. This won the company recognition in this year's Technology Top 100 awards programme, with BMW taking the Automotive: For Assemblers Award as well as the Special Award for Social and Environmental Responsibility, and the Special Award for Productivity Excellence. At the end of the '90s BMW SA's processes, investments and systems were designed to meet local demand. Ian Robertson, MD of BMW SA said "We decided to transform into an export business. The South African market is not large enough to support a motor industry. Therefore, to create a sustainable business it is necessary to become an exporter. There is only one rule that applies in the export business you have to be world class across every aspect of the business, including quality, competitiveness, processes and reliability."

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South African rescue package for Zimbabwe

South Africa has put in place a rescue package for Zimbabwe which will enable it to use its economic leverage to influence events in the country, diplomatic sources said November 21 The package of measures was agreed after a Joint Commission meeting between the two countries' representatives in Pretoria. South African Ministry of Foreign Affairs spokesperson Nomfanelo Kota said Pretoria agreed to help out in a number of ways. But the package - which includes seed and fertiliser, food relief transportation and fuel - was the major issue of the Pretoria meeting. Apart from agricultural help, the package also included helping Zimbabwe resuscitate its declining mining sector. Sources said South African officials believe that instead of giving Zimbabwe economic aid, it was better to help them reconstruct their shattered economy. On the food crisis, South Africa agreed to use its infrastructure and transport network to facilitate the movement of food relief to starvation-hit Zimbabwe.

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Call for more investment into South Africa

Deputy President Jacob Zuma has called on foreign countries to invest more in South Africa saying the country offers a highly competitive and viable environment for foreign direct investment. Speaking in Durban November 22, at the launch of the joint venture between Multi Consult South Africa and the Paradyne Corporation, from the United States (US), he said government always believed in business-to-business partnerships, particularly between South African companies and their foreign counterparts. The move complimented efforts carried out by African leaders such as President Thabo Mbeki through the continent's socio-economic blueprint, the New Partnership for Africa's Development (Nepad). The focus of the Multi Consult South Africa and Paradyne Corporation Joint Venture will be in engineering, management solutions and technologies, with telecommunications and information systems as the main focal areas. "This is a clear indication that we are now venturing into critical sectors that will seriously contribute to taking Africa forward in its quest for sustainable development," the Deputy President affirmed.

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Dell to invest in development

Computer company Dell has pledged to invest at least 1% of its South African revenues in a fund to support social development. Dell is not saying exactly how much money will be involved, but since it sells equipment worth more than R1bn a year at least R10m will be channelled into the community. Dell SA MD Brent Hamilton said the first year could see close to R15m pumped into the Dell SA Foundation, with trustees to be appointed from the business and political spectrums to steer its spending. Last year Dell invested about R17m in social upliftment, but its efforts were uncoordinated until the launch of the foundation. The move ties in with Dell's drive to win more business from government, which accounts for the bulk of IT spending in South Africa. As a Nasdaq listed company it could not strike equity deals with local black partners, so it had to find other ways to raise its empowerment profile. "We have been working for quite some time on our empowerment strategy and meeting key politicians to understand what Dell needs to do," said Thurmond Woodard, Dell's vice-president of global diversity. The foundation will mainly support projects to boost the use of technology in education, but it will also support schemes to provide more basic needs such as food and shelter, said Woodard. "It is important for us to have a workforce for the future and in today's digital economy that means training students to understand maths and science. That may not have any direct benefit for Dell in the short term but there will be a long-term benefit from preparing the workforce of the future."

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Harmony gets NYSE listing

Harmony Gold, which five years ago only just made the qualifying criteria for a listing on New York's technology-dominated Nasdaq exchange, listed on the main board of the New York Stock Exchange November 27, joining the world's other major gold companies. The move to the main board was a logical progression for the company, which has shown dramatic growth in the last few years. Of the Harmony shares that typically trade in a year, 48% are now traded in North America, 28% in Europe and 24% in South Africa. As well as its South Africa listing, the company is also quoted on the London, Brussels and Paris stock exchanges. On a daily basis 3.5 million to 4 million Harmony shares are traded around the globe. "We have internationalised the company and have a large market to serve," said Harmony marketing director Ferdi Dippenaar. When Harmony was formed seven years ago it had a market capitalisation of R180m. This has grown to about R2.4bn today. In the past seven years, Harmony has completed 23 acquisitions and increased its gold production from 580,000 ounces to an annualised 3.1 million ounces for 2002-03.It is now the world's fifth-biggest gold producer with operations in South Africa, Australia, Russia and Peru. Minerals and Energy Minister Phumzile Mlambo-Ngcuka and Harmony CEO Bernard Swanepoel rang the opening bell to start Wall Street trading November 27. "We congratulate Harmony on their successful listing on the NYSE. South Africa remains an extremely attractive investment destination, with Harmony being proof that value can be created for all stakeholders," said Mlambo-Ngcuka.

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Registration for Telkom shares opens

The government launched its registration campaign November 27 to attract those interested in taking up shares in Telkom when the company lists early next year. Despite the continuing weakness of the global telecommunications market and the strength of the rand, the public enterprise department has given no indication of a delay in the listing. It announced that a group of banks led by Deutsche Bank and JP Morgan would underwrite and market the offer. Telkom is expected to list on the Johannesburg and New York stock exchanges before the end of the financial year. It is not yet known how much of the company will be for sale but the listing is still expected to be the largest in the country's history. The registration campaign seeks to attract those interested in the pre-listing offer of shares. All South African citizens will be eligible to buy shares at a discount to the official offer price. Historically disadvantaged individuals (HDIs), defined as groups unable to vote before 1994 will receive a greater discount and there are plans for loyalty reward and subsidy schemes.

New partner in bid for stake in second operator

A new partner is joining one of the bidders vying for a majority stake in the second network operator, with local company No Wire Technologies negotiating to buy equity in the Optis consortium. The bid by Optis was submitted with scant details of its financial backers, with its 73% stakeholders the Friedland family saying they were still negotiating to bring other investors on board. Further details about management players in the Optis bid are expected to be disclosed ahead of public hearings to be conducted by the Independent Communications Authority of South Africa (Icasa) in December. But financial details will be kept under wraps until the hearings. The other bidder competing for the 51% majority stake in the licence is Goldleaf, a consortium of SA-based Gateway Communications, US-based Telecom Africa and former employees of British Telecoms. The winner will be folded into a fourway marriage with Transtel, Eskom and black empowerment company Nexus as its working partners. The main technology partner in Optis is Shanghai Telecom, which has teamed up with the finance house Orient China Investment and committed to take at least 15%. That stake may have been increased by the time full financial details are disclosed, said its deputy chief engineer Zhang Jian.

MTN's staff aim to buy 18.7% of the business

Employees of cellular network operator MTN are so convinced their company is a sound investment that they are raising R3.8bn to buy 18.7% of the firm. Its 3,000 staff have emerged as the mystery buyers planning to buy the stake currently warehoused by Ice Finance, a Dutch investment house. Ice agreed to buy the stake from Transtel earlier this year, and was theoretically holding the shares until a foreign investment partner could be found. But a global depression in the telecoms sector meant no foreign buyers emerged, despite government efforts to raise interest. Now staff have formed a company called Newshelf 644, and negotiated to buy the stock for the staff shareholder trust. The move will bring the shares back into South African hands, and raise its black empowerment and staff ownership profiles without denting the company's balance sheet. 

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