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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.
Update No: 05 - (30/05/02)
President Thabo Mbeki paid tribute to the achievements made by the Organisation of African Unity (OAU), since its formation in Addis Ababa, Ethiopia in
May 1963. The President was addressing guests at the celebration of Africa Day in Sandton, near Johannesburg May 24. The day, which was celebrated throughout
the continent, annually commemorates the birth of the OAU. The aim of the OAU was to promote unity and solidarity among African countries. The African Union
(AU), to be launched in Durban in July and which is modelled on the European Union (EU), will replace the 53-nation OAU. Mr Mbeki said Africa's recovery plan,
the New Partnership for Africa's Development (Nepad), was responding to the call of the oppressed and exploited to value the heritage of their struggle.
Boosted by a weaker dollar and export selling, the South African rand broke below R9.80 per dollar level on May 29th. "The rand's strength can be
attributed to exporters and to the euro's strength. The euro has made gains against the dollar and the rand is basically tracking the euro. Dealers say the
local currency is being boosted by growing faith in South Africa by foreigners, reflected in an increase in the purchase of South African bonds and shares.
The rand has recovered somewhat from last year's 37% slump, buoyed by a rising gold price and investor optimism that South Africa's commodity-dependent
economy will benefit from global recovery. It is the best-performing currency against the dollar this year out of 56 monitored by Bloomberg. Gold rose to its
highest level in 31 months in late May after the euro strengthened against the dollar, making it cheaper for non-US consumers to buy the dollar-denominated
metal. Prices are also being boosted by falling US stocks, and the fear of violence in the Middle East, and a possible war between Pakistan and India. Finance
Minister, Trevor Manuel, attributed the rand's recovery, 38% from the lowest levels of R13.85 to the dollar and 19% since January, to the recognition amongst
investors of the soundness of his policies. The Myburgh commission on the rand hopes to complete collecting its evidence during May and present its final
report to President Thabo Mbeki by the end of June.
The JSE Securities Exchange switched to the Stock Exchange Electronic Trading Service (Sets) of the London Stock Exchange (LSE) on May 13th. The
changeover comes as part of a £11m deal clinched last year, through which the JSE will source key technologies from the LSE. The agreement will also give the
exchanges more access to one another's markets and has been seen by the JSE as vital to its strategy to stem the exodus of South African blue chip firms to
offshore exchanges. Another benefit will be firms' ability to have primary listings in both London and Johannesburg. The new system can handle larger volumes
and was expected to improve the JSE's performance as a global player.
Statistics South Africa says domestic economic activity continued to grow with an increase of 2.2 per cent in the Gross Domestic Product (GDP) in the
first quarter of this year compared to 2001. The main contributors to the increase in economic growth in the first half of 2002 were the finance, real estate
and business services industry with a 3.5 per cent increase; transport and communication industry with 4.8 per cent increase; and manufacturing industry with
2.8 per cent increase. Sectors that did not show significant growth since the last quarter of 2000 such as forestry, agriculture and the fishing industry also
recorded some growth at 4.5 per cent this year. Retailing and manufacturing were the disappointing sectors in the first quarter's GDP data released on May
28th. While growth in the manufacturing sector dipped from 5.6% in the preceding quarter to 2.8% in the first quarter, retail trade dipped from 4% to 1,8%.
The agricultural sector made a strongly positive contribution, growing 4.5% after a decline in the preceding quarter. The return to positive growth following
negative growth in the preceding two quarters, suggests that the beginning of an economic strengthening may be at hand. Global research firm Merrill Lynch
said while the fall in the growth of retailing and manufacturing was "disturbing," the important change was not in the GDP numbers, which Merrill said were
only "slightly disappointing" overall. South Africa has achieved macroeconomic stability, but its GDP of around three per cent per annum is insufficient, says
finance minister, Trevor Manuel.
The government will go ahead with the privatisation of state owned enterprises (SOEs) this year, with plans for Telkom's listing on the Johannesburg
Securities Exchange (JSE). Telkom's listing on the JSE last year was postponed due to unfavourable market conditions. Speaking during his department's budget
vote in Cape Town on May 16th, public enterprises minister, Jeff Radebe, said there were nine privatisation proposals in the pipeline that would earn
government revenue to the tune of R12bn. The government has outlined deals in the defence, telecommunications and ports sectors and is raising hope it will
meet this year's R12bn target for the proceeds from privatisation. Key among the deals announced are the sale of 30% of Denel Aerospace and Ordnance and a
possible future listing. The new impetus for South Africa's flagship privatisation programme should help bolster flagging investor confidence, while injecting
billions of rands into government's coffers. Public Enterprises Minister Jeff Radebe said that global defence manufacturer, BAE Systems, had bought the Denel
stake for R375m. While the government would retain its 70% stake in the interim, it would explore the options for employee share ownership, black economic
empowerment and the inclusion of other strategic equity partners "including a possible initial public offering (IPO). BAE executive director, Stuart McIntyre,
said BAE was looking forward to a very "productive long-term relationship" with Denel aimed at building a strong global industry, maximising Denel's business
and developing its technologies. On Telkom, Radebe said global market conditions had improved "so that we can proceed with the Telkom IPO before the end of
this current financial year". The size of the offering would be finalised soon. The state would also transfer 2% of Telkom, worth R376m, to employees.
At least four big international telecommunications companies from Portugal, India, the UK and the US have emerged as potential bidders for a majority
stake in South Africa's second telephone operator. Local company M-Cell is the only local potential bidder to have indicated any interest. If it decides to
bid it may be in partnership with one of the foreign players. But it is not certain that it will participate at all. Foreign interest is expected to be
bolstered by the relatively mild delivery and investment targets set out in the draft licence for the new operator. They include a network, which will cover
80% of SA in 10 years and deliver 15,000 community phones in rural areas over the same period. The licence will cost R300m and the new operator will also have
to pay an annual licence fee of 0,1% of revenue. The winning bidder for the 51% stake in the new operator will have ready-made partners, with Transtel and
Eskom guaranteed 30% and a black economic empowerment company due to get the remaining 19%. Communications Minister Ivy Matsepe-Casaburri said binding bids
for the licence were due in on 30 August. "We hope to be able to announce the winning bidder possibly by December," she said. An official close to the process
said that Portugal Telecom, British Telecom, AT&T and two Indian companies Bharat Sanchar Nigam and Mahanagar Telephone Nigam, which could bid jointly had
expressed interest. But other international and local bidders could also appear.
Foreign Affairs Minister Nkosazana Dlamini-Zuma said during her department's budget vote on May 28th that South Africa should help bring Zimbabwe back
from the brink rather than push it over the precipice. She was replying to critics of Pretoria's quiet diplomacy towards Harare. It was reported that
President Thabo Mbeki would hold talks with his Zimbabwean counterpart Robert Mugabe on the fringes of a Democratic Republic of the Congo summit in Zambia May
30, in an attempt to get him back to the negotiating table with the opposition MDC. The credibility of the New Partnership for Africa's Development (Nepad)
was at risk should leaders fail abide by its core values, and act over Zimbabwe. Aims include strengthening political and administrative transparency,
accountability, integrity, respect for human rights and the promotion of the rule of law. Referring to Zimbabwe, he said government had to understand that
when a partnership was based on a collective commitment, as in the case of Nepad, each time a country failed to uphold -- or wilfully violated --those values,
the partnership was diminished.
Mozambique has now overtaken Zimbabwe as South Africa's largest African trading partner. Statistics for last year show that trade between South Africa and
Mozambique was R5,72bn, SA/Zimbabwe R5,38bn and SA/Zambia R4,89bn. Over the past three years, Zimbabwe continued to experience a net flight of portfolio
investment during its continuing crisis. Mozambique is turning out to be Africa's fastest growing economy while Zimbabwe is gaining the reputation of being
the continent's fastest shrinking economy. This has seen South Africa turning away from Zimbabwe to Mozambique where the investment climate is hospitable.
Investments worth more than R25bn have been channelled into Mozambique by South African companies over the past few years. Zimbabwe's declining political and
economic environment has been largely to blame for this shift. Zimbabwe's high-risk status has seen a decline in cross-border credit guarantees, affecting
Harare's export performance. Offshore financiers were reluctant to offer locals any corresponding lines of credit, resulting in trade partners preferring cash
upfront. This has been further worsened by lack of donor funding and the imposition of economic sanctions. Over the past three years, Harare has continued to
experience a net flight of portfolio investment. In 1997 portfolio investment stood at around US$32 million. The pattern has however changed with the country
registering net outflows in the US$10-$15 million range over the past two years. This reflects a general unwillingness of global financial markets to extend
credit to Zimbabwe. Zimbabwe is currently experiencing a crisis characterised by runaway inflation, foreign currency shortages, rising poverty levels and
general decline in virtually all key sectors, thus pushing up unemployment. Currently Zimbabwe's unemployment levels are believed to be above 65%.
A report jointly compiled by the UN World Food Programme and the Food and Agriculture Organisation has stated that famine in Malawi, Zimbabwe, Lesotho and
Swaziland is not yet widespread, but warned that urgent action is needed in order to avert a humanitarian crisis. It added that once information is completed
from two other southern African countries - Zambia and Mozambique - the situation would appear "even bleaker". There are several reasons, the report states,
for the current crisis, including drought, economic policies and, in Zimbabwe, the disruption of farming due to the government's controversial land reform
programme. The price of maize - southern Africa's staple food - has also soared due to drought affecting the crop in countries such as Malawi. Both agencies
have called on international donors to provide supplies, estimating that southern Africa will have to import almost 4 million tonnes of food over the next
year if it is to meet the needs of its population. The crisis has been made worse by the high rate of HIV and Aids in the region, which has weakened the local
population's resistance to disease and left them more susceptible to famine.
Transnet unties its apron strings
The public enterprises ministry is poised to sell a majority stake in Transnet's baggage handling business, Apron Services, a move which will close the
unhappy saga of SA Airways' partial privatisation, Business Day has reported.
The run-up to the sale of Apron Services has been complicated, involving a secret pact which threatened to derail the SAA privatisation, planned court action
against government, a complaint lodged with the European Union (EU) and more.
It all started in 1999 with the sale of 20% of SA's national carrier, SAA, to (the now defunct) Swiss aviation group Swissair. The negotiations were tough,
with the Swiss firm demanding as much as possible for the premium price of R1.4bn which it was prepared to pay.
SAA had only recently moved back into the black after the appointment of US businessman, Coleman Andrews. Officials from government, Transnet and SAA, who
were negotiating the sale, needed to come up with a few sweeteners to clinch the deal, and they hit upon Apron Services and catering firm, Air Chefs.
Swissair was given the right of first refusal once the two companies were placed on the market. However, the competitive sale of Apron Services had been on
the cards for several years. A number of SA and international consortiums were gearing up to buy the company on the understanding that it would be sold via a
competitive bidding process. These bidders stood to lose out as Swissair could have clinched Apron Services by matching the asking price or raising it by R1,
by virtue of its right of first refusal.
Giving Swissair the right of first refusal had various implications. It could have precluded a black economic empowerment company from becoming involved in
Apron Services. Government was also unlikely to get the best price for the company.
Equity Alliance, a black empowerment group with international partners, was one of those bidders which stood to lose out. It launched an immediate offensive
by lodging objections with the Competition Commission and the EU's competition directorate.
Equity Alliance also threatened to stop the SAA-Swissair deal, and came close to halting the final ratification of the partial privatisation.
In the meantime, the SAASwissair acquisition fell apart when Swissair filed for bankruptcy. Government decided to exercise its right to buy back the stake in
SAA and did so for a bargain basement price. SAA is now 100% owned by Transnet, the state-owned transport group.
Public Enterprises Minister Jeff Radebe said the sale of a majority stake in Apron Services was close to completion. Once finalised, Serco, a UK logistics
firm, and Equity Alliance would own 51% of Apron Services in a joint venture called Equity Aviation.
"The final deal will probably see the empowerment company Equity Alliance owning as much as half of the 51% stake the consortium is buying," she says.
Meyer declined to give details on the value of the deal, but Apron Services is estimated to be valued at between R350m and R400m.
The consortium plans to transform Apron Services into an "integrated logistics business," taking it into various new related areas of business. Its priority
will be to initially consolidate the business and improve the levels of service to its core customer, SAA. The aim will be to complement SAA's desire to grow
and offer a world class service.
Nedcor-BoE merger approved
Nedcor and BoE have been given the go-ahead to merge by Finance Minister Trevor Manuel. A statement from Nedcor said the shareholders of BoE, who have the
final say in the transaction, should receive their circulars setting out the full details of Nedcor's friendly bid early in June, Independent on Line has
Manuel has notified the Registrar of Banks of his approval of the proposed Nedcor-BoE transaction. The merger will create South Africa's largest bank in terms
of domestic banking assets.
The next step in the bid process is an application to the High Court, to approve the circular to BoE shareholders which contains full details of the Nedcor
offer and all the salient dates. Nedcor is offering R290 cash plus 0.48544 Nedcor shares for every 100 BoE ordinary shares.
Brighter prospects for construction
Notwithstanding a number of risks in the broad environment in which the construction industry operates, for example the possibility of a further rise in
interest rates, clear signs of positive medium-term factors are also emerging.
The Stellenbosch-based Bureau for Economic Research says it appears that a renewed global upswing is in sight, which in time will lead to higher domestic
expenditure and thus construction activity. Furthermore, government is committed to increasing infrastructure expenditure. This should become an important
source of new work for the industry over the next three years.
The upswing in the residential sector is continuing. Respondents to the first quarter BER business survey indicated that business conditions turned out better
than expected and they anticipate that the favourable business environment will continue in the second quarter. It does not expect the rise in interest rates
to have a major adverse impact on the sector as rates are still comparatively low and tax cuts announced in the budget are likely to boost real disposable
income during the remainder of the year. The government's housing programme is expected to accelerate in view of higher budget allocations.
FOOD & DRINK
SAB-Miller could boost Pilsner sales
A potential merger between South African Breweries and Miller Brewing Company could mean a boom for the Czech Republic's largest export brew, Pilsner Urquell,
The Prague Business Journal has reported.
A merger with Miller, the second largest beer producer in the United States, would likely improve Pilsner's reach into the lucrative US market. Miller is
among America's oldest beer makers and has a well-established distribution network.
When South African Breweries (SAB) brought Czech brewing companies Plzensky Prazdroj and Pivovar Radegas in 2000, it placed Pilsner at the top of its priority
list for international brand building and cast its eyes on the US market. The brewery sent about a million cases of Pilsner, or about 85,000 hectolitres to
the US last year. SAB officials say they would like to see that increase by nearly 50 per cent annually.
For months, rumours have floated about in industry and investor circles about SAB's interest in acquiring Miller. SAB finally confirmed in April that it is
indeed discussing a possible buyout with Miller's owner, US tobacco producer, Philip Morris. SAB was quick to temper its confirmation by saying that talks
are in the preliminary stage and it is not yet certain whether they will lead to anything. "As part of its strategic development SAB is in discussions with
a number of third parties regarding the ongoing consolidation of the beer industry," company spokesman, Nick Chaloner, said in a statement.
FOREIGN ECONOMIC RELATIONS
SA seeks to add trade in UN talks
South Africa, the host nation of the United Nations World Summit on Sustainable Development, is pushing for trade and development issues to top the agenda
when world leaders meet in Johannesburg in August, James Lamont wrote in the Financial Times.
Developing nations are also hoping to focus the summit on improved trade access for their agricultural produce to the European Union and the US.
But it is a change of emphasis that opens the prospect of confrontation with the US over agricultural trade policy.
Environmental Affairs and Tourism Minister, Valli Moosa, said that issues of debt relief, attracting investment into poor countries and trade access for
developing countries would be key themes at the summit.
South Africa is keen to shift the emphasis of the debate from environmental concerns towards those of human development and poverty alleviation.
African countries intend promoting the New Partnership for Africa's Development (Nepad), an initiative promoted by President Thabo Mbeki, at the summit.
The framework promotes good governance and democracy in return for increased aid and private-sector investment commitments.
Nepad is expected to receive a qualified blessing of the Group of Eight industrialised countries at a meeting in Canada next month.
But South Africa wants to use the UN summit's focus on healthcare, energy, water, food security and biodiversity to bolster the aims of the fledgling recovery
A charged debate over agricultural subsidies in the developed world could endanger the US's full participation in the summit.
Undersea Cable System Linking Africa With Other World Ready for Service
The communication between the Africa continent and the other world will be cheaper and more convenient with a new optical fibre undersea cable system ready
for service, the Business Day newspaper reported.
The report said that the system, called SAT-3/Wasc/Safe, in which South Africa's telecommunication giant Telcom is a major player, will dramatically increase
South Africa's bandwidth capacity.
The system, developed by 36 telecommunications operators from 31 countries around the globe, will cater for Africa's international telecommunications
requirements for the next 25 years. It is being launched in Dakar, Senegal at the beginning of June.
The cable spans a total of 28,000 kilometres and connects the countries of Portugal, Spain (Canary Islands), Senegal, Ghana, Benin, Cote d'Ivoire, Nigeria,
Cameroon, Gabon, Angola, South Africa, Reunion (France), Mauritius, India and Malaysia.
The system has cable stations in Portugal and Spain in Europe, and India and Malaysia in Asia. This enables customers to have access to other global submarine
networks with direct optic fibre links to most part of the world -- a first for many African countries.
Berth plan for visiting ocean liners
The City of Cape Town is enjoying a bumper season with tourists aboard 42 ocean liners so far docking this year. They come ashore to boost the local economy
by spending anywhere between R15 000 and R30 000 a day each. In previous years average annual arrivals by liners were 13.
Yet, as things stand, many of those tourists are welcomed to a multi-purpose terminal that is used for as diverse a list of activities as it is possible to
have in a busy port.
"Whilst 80% of the cruise liners have been able to berth in the Victoria and Alfred Waterfront, a very sophisticated shopping and entertainment precinct in
the heart of Cape Town, the larger vessels such as the Europa and the QE2 have been located in E berth in Duncan Dock," says Cape Town Tourism's Sheryl
The state of play means that passengers from larger vessels often have to share a quay with loading fruit, tractors moving about and railway lines that are a
safety hazard. Nevertheless, says Ozinsky, there are a number of short and long term initiatives underway to address the problem.
"In the short term, the Port of Cape Town is working with local service providers to provide as high a level of service as is possible in the absence of
dedicated ocean liner tourist facilities."
"The City has also commissioned market research into the cruise liner industry to inform it as to whether a dedicated cruise liner terminal is a priority
infrastructure, and if so, which location option within the port exists. A detailed feasibility is being undertaken, looking also at what marketing measures
will be required to increase Cape Town's share of the cruise liner market," says Ozinsky. The study should be released by the end of next month.
Although no-one is naming the party, it is believed that an unsolicited offer to develop a cruise liner terminal has been made, with a specific location in
the port already submitted to the Ports Authority for consideration. The Ports Authority has declared its preference for a competitive call for proposals
once market research has been completed.
New transport plan for Cape Town
A survey of the great tourism cities around the world shows that they all have superb inner city transport systems that enable tourists to sample the unique
offering of each city with minimum fuss and expense. Some transport systems have, in their own right, become features in the cities they serve.
It is a feature that has been singularly absent from the Cape Town tourist infrastructure, where a persistent criticism has been that while it is easy to get
to the city, it is hugely difficult to move about within its precincts.
It appears that the criticism is about to be addressed with the launch, in January 2003, of the Inner City Public Transport System that will operate in the
City Bowl area and will link the Victoria and Alfred Waterfront, the Cape Town CBD and the lower Gardens area as far as the bottom end of Kloof Nek Road.
The launch will bring to an end a process that has cost R2 million to date in planning, including the cost of facilitating public participation and
consultation. It began in 1996 when a consortium of firms was appointed to make a detailed study of the city's transport needs.
"On offer will be buses, minibus-taxis and metered taxis, painted in Cape Metropole livery, with shelters and service information provided along the route.
Each stop will be covered by the City's existing CCTV network", says Ronald Kingma, the City's interim manager Public Transport.
"The new service will operate on a fixed route and to a scheduled timetable at 15 minute intervals. It will run for 18 hours a day, seven days a week,
starting at 06:00 and ending at 24:00. Outside of these hours metered-taxis will be available."
The estimated cost for the total project, including shelters, marketing, electronic ticketing system, the passenger information system and measures to enhance
safety and security, is R11.6 million for the first year and R 9.3 million per year thereafter.
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