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SOUTH AFRICA


  
   

REPUBLICAN REFERENCE

Area (sq.km)
1,219,912

Population
43,586,097

Capital
Pretoria

Currency
rand

President
Thabo Mbeki

Background:
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: 19 - (01/08/03)

African Union Summit 
President Thabo Mbeki got tough with his continental compatriots July 10, calling on those who were delaying the ratification of the vital peace and security council to finalise their decisions. Addressing leaders from across the African continent gathered for the second annual summit of the African Union (AU), Mbeki said more time, energy and resources needed to be dedicated to the organisation if it was to achieve its goals. But by the time leaders started their discussions only 12 countries had ratified the protocol, whereas 27 are needed. This means the establishment of the council will have to be put on hold until more countries come on board. The president described the council as a collective security and early warning arrangement that would facilitate quick responses to conflicts and crises in Africa. Since the union came into being, he said it had been seized with efforts to resolve a number of conflicts and cases of instability across the continent, including Burundi, Sudan, Sierra Leone, Madagascar, Somalia and Côte d'Ivoire. "We must decide that the peace and security council should be in operation before the end of the year. Those of us who are delaying with the ratifications of the protocol must please deal with that question so we can move ahead," Mbeki said. Mbeki also called for greater urgency in building the institutions of the AU, saying greater energy and resources needed to be dedicated to the organisation if it hoped to achieve its goals. Heads of state focused on how to integrate Nepad into the AU. Mbeki said the creation of Nepad, a blueprint to drive Africa's development, had helped place Africa at the apex of the global agenda. "(Nepad) is Africa's principal agenda for development, providing a holistic, comprehensive and integrated strategic framework for the socio-economic development of the continent," he said.

George Bush Visits South Africa
There are serious risks that the US may want to use South Africa as a dumping ground for its subsidised goods under an acceleration of the African Growth and Opportunity Act (Agoa). The US economy is feeling the pinch of having neglected the African continent while the European Union took giant leaps to increase its presence. Bush's tour of Africa is a sign that the US is serious about forging a meaningful relationship, albeit skewed, at a time when its options (other than military action) are rapidly declining. US President George Bush and President Thabo Mbeki buried the hatchet over their differences on the war on Iraq and reached agreement on continued co-operation in the war on terror. The two presidents cemented the relationship between their countries July 9, acknowledging the political pressure they faced with regard to sustaining regional and world peace. Bush accepted Mbeki's strategy on Zimbabwe, but emphasised the need to resolve the crisis in that country speedily to rescue its crippled economy. The US and South Africa have undertaken to work together to strengthen border security and law enforcement within the Southern African Development Community. This was a milestone achievement for the Bush administration, which was not comfortable with speculation that tension between SA and the US over Iraq could scuttle US efforts to root out terrorists around the globe. Part of Bush's mission on the continent was to strengthen alliances to reduce hiding places for international terror organisations such as Al-Qaeda. Bush said the US was devoting R800m to help countries in east Africa increase their counter-terror efforts. "We are determined to fight, and to join our friends to fight, terrorists throughout this continent and throughout the world," The visit clearly pleased the Pretoria government but scores of protesters condemned his presence in the country. As Bush gave his blessing in Pretoria to President Thabo Mbeki's much-criticised "quiet diplomacy" on Zimbabwe, he was maligned at the US embassy a short distance away. "Go away, we've got enough Bushes in Africa," read a poster waved around in an anti-American demonstration at the embassy.

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AUTOMOBILES

Fiat Expansion Programme 

Fiat Auto SA has embarked on a major expansion drive and is seeking partners to penetrate new markets in sub-Saharan Africa, and consolidate and build on its assembly line and supplier base in this country. Fiat Auto SA, the automotive arm of the Fiat Group in Turin, Italy, is the seventh-largest manufacturer of motor vehicles in the world. It sells about 2.5-million vehicles a year on average. SA is one of the countries with manufacturing facilities operated by Fiat Auto, with others in Italy, Brazil, Argentina, Poland, Turkey, Egypt, Morocco, India, China and Russia. Giorgio Gorelli, MD of Fiat Auto SA, says the company's new growth and expansion drive is in line with objectives set out in an important strategic announcement in Italy in June. It calls for a major thrust in the areas of new product development and research and development, as well as in innovation and marketing. Fiat Auto SA recently assumed responsibility for the development of all sub-Saharan markets, including SA. It plans to export both the Fiat and Alfa Romeo brands to the region. 

Exports Increase Foreign Exchange Earnings

South Africa can expect foreign earnings from automotive industry exports to equal earnings from gold exports for the first time next year, according to projections by Standard Bank. This could bring a measure of stability to the rand if foreign exchange earnings from motor vehicle and automotive components proved to be less volatile than export earnings from commodities, said Standard Bank group economist Iraj Abedian. "If the volatility in foreign earnings lessens, then accordingly the volatility in the exchange rate should be lowered," said Abedian. The banks forecast that automotive industry exports would total $2.8bn this year compared with $4.1bn earned by the gold mining sector. Export earnings of cars and automotive components were set to equal or overtake gold earnings next year, Abedian predicted. The growth in automotive industry exports reflected the growing diversity of SA's exports and the lower reliance of the SA economy on the mining sector.

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AVIATION

SA company to run Mozambique airport 

A South African company has been selected to run the Maputo International Airport, a senior government official says, AFP has reported. 
Estevao Uamusse, a national director in the Mozambique transport ministry, said the Airport Company of South Africa (ACSA) had qualified to lease the airport for 15 years from the government. "We are currently holding negotiations with them so that a contract can be signed," Uamusse said. 
He said ACSA had pipped Africa Skies, a consortium of Mauritian and Zimbabwean firms, which was the only other contender bidding to run Mozambique's largest airport. Uamusse said the Mozambique government hoped to see ACSA operating the airport by the end of the year. 
The South African company is expected to invest at least $24 million in improving runways, lighting, security, cargo handling facilities and access roads at the airport. 
Uamusse added that the government was also going ahead with a privatization plan for the national airline, Linhas Aereas de Mocambique (LAM). 
"The programme is irreversible. We are at the final stage of preparing documents for an international tender, which will be launched, in principle, between September and October," he said. 
The government currently holds an 80% stake in the national flag carrier and is seeking a buyer for a 51% stake. After an attempt at privatization failed in 1996, LAM was transformed from a state company into a limited liability company, in which LAM employees acquired a 20% stake. 
In recent years LAM has made losses. It only flies to South Africa, Zimbabwe, Tanzania and Portugal, the country's former colonial power. 

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BANKING

Access to finance will play big with Charter 30.07

Banking group Nedcor said on 29th July that it would look to rack up points in the much-awaited finance sector empowerment charter by providing people with access to finance through partnering with retailers, including Pick 'n Pay and JD Group.
The finance charter is expected to set out a blueprint for how banks are expected to take par t in efforts to transform SA's economy through black economic empowerment, Business Day has reported.
Although a final document is only expected at the end of September, the charter is likely to allow companies to score points in various categories.
Facilitating access to finance has been seen by some as a crucial leg of the likely charter more important even than selling a stake to black investors.
Nedcor CEO, Richard Laubscher, said that his group was "excited" about the charter and the lending opportunities it would create. He said Nedcor would look to increase its points of presence so as to "take access to finance to a broader group."
Nedcor already has existing banking partnerships with food retailer Pick 'n Pay through its Go banking product, as well as through an alliance with furniture retailer JD Group.
Laubscher said Nedcor would look to "use their operations to provide us with a point of presence" in certain areas where banking services were lacking.
While Nedcor believes that such a plan will permit it to score quite highly on the probable access to finance requirement, the group has no immediate plans to sell an equity ownership stake to black investors.
Absa said recently that it wanted to sell between 5% and 10% of its group equity to black economic empowerment investors by the end of the year provided it can work out a way of financing the deal.
Although Nedcor has done a number of empowerment deals at subsidiary level, including selling 30% of People's Bank some time ago, it has not yet talked of a group-wide equity sale. Laubscher said Nedcor was not ruling out any deal at the top level but the group also had no current plans to do such a deal. He said Nedcor would wait to see the "shape and form" of the charter. The People's Bank subsidiary has a 30% empowerment shareholding and is focused on low-income customers.

Barclays Expansion

Barclays Bank is expanding its activities in South Africa in the niche areas in which it operates and is moving the regional headquarters of its African business to Johannesburg. "SA is an important component in the pan-African strategy," says Isaac Takawira, country MD of Barclays' SA branch. The branch recently received about R470m additional capital from its UK parent. Takawira says the capital injection demonstrates Barclays' commitment to the SA market and to continue growing its franchise here. Barclays disinvested from SA in 1985 but returned in 1995-96, and has steadily grown since then. It initially had a dozen people in Johannesburg; this will reach 230 by the end of this year and an expected 340 by the end of next year as the bank transfers jobs from London as part of the move of the Barclays Africa headquarters to SA. Barclays has a presence in 11 African countries including SA, employing 7,500 people in its 226 African branches. It has 1.4-million customer accounts in Africa and 246 automatic teller machines. The bank's approach is to follow its customers, supporting them wherever they operate. Barclays has a presence in 11 African countries including SA, employing 7500 people in its 226 African branches. It has 1,4-million customer accounts in Africa and 246 automatic teller machines.

ABSA Plans Major Equity Deal

South Africa's leading retail bank, ABSA, is planning an empowerment deal worth at least R1.2bn involving the transfer of between 5% and 10% of the group's equity to Black shareholders. This comfortably exceeds the biggest banking empowerment deal so far, Investec's R800m sale of 25% of its local operation. At a media seminar held in a Namibian seaside resort July 5, ABSA Deputy CEO Rupert Pardoe said the group believes that for empowerment to be meaningful, shareholding "must be at the top level". ABSA's broad idea is to bring together a grouping of empowerment shareholders which will include staff, customers and "perhaps some well known BEE players who possess capital they are prepared to put at risk." ABSA's decision to introduce new directors and more Black shareholders at the listed company level is a logical step flowing from the group's view that Black Economic Empowerment presents "a wonderful opportunity." It is determined to retain the position as the country's biggest retail banking group and "wants to dominate the Black space."

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ECONOMIC FREEDOM INDEX 

South Africa 42nd

South Africa is Ranked 42nd Out of 123 Countries On Economic Freedom Index. South Africa and Zambia share 42nd place in the world on the economic freedom ranking contained in the Economic Freedom of the World: 2003 Annual Report released July 9. Although South Africa's ranking improved from last year's joint 47th its rating remained the same at 6.8 out of a possible 10. Zambia improved from 60th to join SA in overtaking countries like France, Greece, Peru, the Bahamas, Argentina and the Philippines, all countries whose ratings declined. Hong Kong (8.6) retains the highest economic freedom rating, followed by Singapore (8.5), the United States (8.3), New Zealand (8.2), and the United Kingdom (8.2). The rankings of other large economies are Japan, 26; Germany, 20; Italy, 35; France, 44; Mexico, 69; China, 100; India, 73; Brazil, 81; and Russia, 112. The bottom five nations are Guinea-Bissau, Algeria, Zimbabwe, the Democratic Republic of the Congo, and Myanmar. This 7th global economic freedom report ranks 123 nations on 38 variables with data provided at five-year intervals back to 1970. This allows readers to track the progress of countries across three decades and clearly identify trends in economic policy in the countries analysed. The Annual Report, published by Canada's Fraser Institute in conjunction with South Africa's Free Market Foundation and 57 other independent institutes from around the world.

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ENERGY

Nuclear Reactor Prospects

If South Africa's Pebble Bed Modular Reactor (PBMR) is given the complete go-ahead, Phumzile Tshelane, Technology Strategy Executive, PBMR estimates that exporting as few as 10 modules per year could yield up to R8 billion for the local gross domestic product (GDP) and R10 billion per year in exports. Before permission is granted, however, the Department of Environmental Affairs and Tourism (DEAT) must review and comment on Earthlife Africa's appeal against it. The project could create some 57,000 direct and indirect jobs. Doubling that, which is not unrealistic in terms of international interest so far, could have far-reaching sustainable development opportunities. To date R1 billion has been spent on ensuring that the PBMR will be viable. Calculations by Earthlife Africa conclude that costs could reach $600 million for the commissioning of the plant, a drain on what the NGO describes "taxpayers and consumers funds". In an emotive outbreak the NGO questions Eskom's right to take "our money and put it into some high risk experiment". "Total predicted costs amount to $1 billion" says Tshelane, "and Eskom's share is 25%". This includes the construction of the nuclear fuels plant at Pelindaba as well as the costs of decommissioning, long-term storage of radioactive waste and insurance. Tshelane also points out that the taxpayer will carry no financial burden through the project.

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FINANCIAL NEWS

Rand - Global Recovery Could Subdue Rand

JPMorgan expect the rand to drift slightly weaker as the year goes on. Their forecast of R8.20 to the dollar by year-end is based on the premise that the current account will continue widening and that exchange control relaxation will create an outflow of local capital. A recovery in global growth - and a pick-up in the dollar - could also undermine the relative appeal of the rand. "We expect the flow of funds supporting the rand to deteriorate towards year-end as the current account widens ... and blocked rand accounts are unwound. ... Institutional investors are also expected to increase their foreign investment holdings in line with the prudential limits set in the 2003 Budget". But these factors are no cause for alarm. The investment bank suggests the Reserve Bank will manage the outflow of blocked rand in order to limit rand volatility. It also adds that the rand is no longer the one-way bet it used to be, now that structural weaknesses such as the net open forward position have been removed. Shifts in the global cycle will affect the rand, too, it warns. Currencies which, like the rand, are strongly correlated with the global growth cycle and thus with commodity prices typically outperform when world growth improves. But, importantly, the dollar also improves under these circumstances. Added factors, particularly the global interest rate picture, could play an important role in currency trends too.

Interest Rates - Cuts Help Avoid Recession

South Africa's economy should ride out the threat of a recession that has already started to rear its head in the mining and manufacturing sectors, with lower interest rates and strong domestic demand helping to support economic growth, according to new research released July 16. Although gross domestic product (GDP) growth slowed to a five-year low of 1.5% in the first quarter of this year and the mining and manufacturing sectors started seeing signs of contraction, the Bureau for Economic Research at Stellenbosch University said "the economy is far from a recession". The bureau downgraded its economic growth forecast for this year to 2,2% from 2,6% previously, but said it expected the economy to grow at a faster pace of 3,5% next year. Domestic expenditure, which has remained fairly resilient despite last year's four interest rate rises, would continue to support economic growth and was likely to accelerate as interest rates are lowered this year. The bureau expected the Reserve Bank to cut interest rates by another three percentage points in the next seven months. Global economic conditions would also improve later in the year, giving some impetus to the export sector, the bureau said. Stronger growth next year should improve the outlook for the local equity markets as investors' risk appetite improves and the rand weakens. This should give a boost to the JSE Securities Exchange SA, which has seen its all share index fall almost 6% this year. The all share was slightly weaker yesterday, slipping 0.22%, despite a huge sell-off of gold mining stocks, which sent the gold index down 6.8%.

Mbeki looks to cheaper money to fuel growth

President Thabo Mbeki has joined growing calls for lower interest rates, coming out in favour yesterday of a policy of "cheaper money" to fuel economic growth, business Day has reported.
Reacting to news of a sharp fall in consumer inflation last month, Mbeki said he was certain the Reserve Bank was sensitive to the effect of high interest rates on economic growth. "We have no influence on the matter, but clearly cheaper money would be good for the economy," he said.
Mbeki made the remarks at a briefing on the outcome of a three-day Cabinet lekgotla at which several expanded initiatives and new interventions aimed at creating jobs, helping the rural poor and unlocking constraints to growth were unveiled.
Key among them is direct government funding for rail and ports infrastructure likely to amount to several billion rand. "Because of the expansion of the economy, the transport system finds it difficult to cope. We need large investment in both rail and ports," said Mbeki.
Transnet is already investing R45bn over 10 years to deal with the huge infrastructure backlog at SA's ports, railways, roads and in the airline sector. In a first for government, additional resources will be provided by the state to improve the rail network, and to upgrade roads.
Mbeki also announced advanced plans for an expanded public works programme to alleviate poverty and develop skills. It will focus on building social infrastructure, including housing, municipal services, roads, government facilities and land care.
An initiative to recruit skills from outside SA was agreed upon, as well as setting aside a portion of the National Skills Fund and the National Student Financial Aid scheme to pursue training for scientists and researchers, managers, professionals and artisans.
However, Mbeki poured cold water on the possibility of a basic income grant for all being implemented. The government's approach was to evolve a comprehensive social security system by building on current initiatives such as old-age pensions, disability and child grants and the public health system.
Mbeki said a great deal of progress had been made in all areas identified under the reconstruction and development programme. "It is now generally accepted that the macro-economic crisis inherited in 1994 has been overcome."
The challenge now was to stay the course of building on export successes, expanding service sectors, providing critical economic infrastructure, boosting investor confidence and strengthening the regulation as well as the management of parastatals.
The government would have to lead the way in improving the lives of the rural poor. This would be achieved in part by the extended public works programme, adding to the interventions under way as part of the integrated rural development programme.
"The country is now in a better position (financially) to address all of these matters," Mbeki said.

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HIV/AIDS

US Funding

No preconditions have been set for South Africa to access a slice of the $15bn the US has made available against HIV/AIDS, President, Thabo Mbeki, said July 9. The absence of preconditions has been seen as a vote of confidence in Mbeki's leadership and the country. South Africa will take advantage of the US's comprehensive approach to combating HIV/AIDS, which would include awareness, health infrastructure and treatment. Health Minister, Manto Tshabalala-Msimang, is expected to "look at the totality" of what the US is willing to provide and prepare a watertight proposal. Mbeki said: "We want to respond to that request as quickly as is possible... with a particular concrete kind of action, with the necessary costing when we get to that stage". SA briefed the US about its increased budget to fight the disease. It also explained the difficulties it had experienced in the past on rolling out a comprehensive antiretroviral drugs programme. This included lack of capacity, especially in rural areas. Mbeki welcomed yesterday the $15bn grant Bush has pledged in the global fight against AIDS. The US is expected to monitor the project closely by ensuring that there were huge numbers of AIDS sufferers who benefited. A successful HIV/AIDS programme in SA will also boost the US's image internationally and on the continent. Bush said the US needed a comprehensive strategy to make sure the grant was well spent on good programmes to develop health infrastructure in remote parts of different countries so that "we can actually get antiretroviral drugs to those who need help". He said the US also supported a moratorium on the enforcement of drug patent laws concerning life-threatening diseases.

Drug Withdrawal 

Campaigners have expressed alarm at the possibility that the South African Government could withdraw its approval for the anti-Aids drug Nevirapine. Nevirapine prevents HIV-positive pregnant mothers passing on their infection to their child. A single dose of the drug given at the onset of labour, and a single dose to the newborn within 72 hours of birth, has been shown to reduce mother-to-child transmission (MTCT) of the virus by 50%. But the South African Medicine Control Council (MCC) has expressed doubts over its safety. The MCC's announcement comes just days after the World Health Organisation (WHO) reconfirmed its support for the drug to be included in the minimum standard package of care for HIV-positive women and their children. Nevirapine became the first anti-retroviral drug approved for use in the country in 2002 after activists won a court order forcing the government to provide it for HIV-positive mothers. South African activists have long campaigned for anti-retroviral drugs to be made freely available in South African hospitals. But the government says that the drugs are expensive and has preferred to emphasise the importance of nutrition and poverty reduction. It also says it prefers prevention over treatment. The MCC action has created fear and confusion among South Africans, leaving those on the programme sad and de-motivated, she said. The TAC says that 1.8 million additional children will lose a parent by 2010 if the anti-Aids drugs are not provided. South Africa has more HIV-positive people than any other country in the world. Activists say some 600 South Africans die from Aids-related diseases each day. The council's announcement is now likely to dominate the conference of South Africa's National Aids Congress next in Durban in August

World Bank Warning

The World Bank has issued a dire warning to South Africa that it could be on the "brink of progressive collapse" because of the blasé government approach to HIV/AIDS. Collapse can be prevented only if a significant chunk of gross domestic product is diverted to prevention and treatment, as well as investing in AIDS orphans. A new World Bank research report presented these conclusions, warning that HIV/AIDS causes far greater long-term damage to national economies than previously assumed. "The Long-run Economic Costs of AIDS: Theory and an Application to South Africa" makes it clear that inaction is national suicide. "The consequences of doing nothing are nothing short of disastrous. The epidemic sets in train a complete collapse of both the economy and, almost surely, the social institution of pooling [extended family care] within a few generations." If the epidemic continues unchecked, the authors estimate that "the descent into backwardness is complete by 2050, when family income is a little less than two-thirds its level in 1960." Simply put, the study confirms that South Africa is discarding human capital at an alarming rate because of AIDS, whilst the number of related orphans is climbing which creates further burdens that will hit every taxpayer hard. Despite the pessimism there is also good deal of generosity because it is assumed that South Africa can once again grow as it did from 1960-1975, something that has not been achieved nearly fifteen years on from the commencement of formal social and economic liberalization, although it is certainly attainable with sufficient political will.

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MINERALS & METALS

Angloplat R2bn Deal

Anglo Platinum, the world's largest platinum producer said July 24 that it had agreed in principle to establish a 50:50 joint venture with a black empowerment partner at its Booysendal property on the Eastern Bushveld. Although Angloplat has released no details of the project, the mine is widely expected to produce 200,000 oz a year and forms part of the group's plan to reach a production rate of 3.5 million ounces of platinum by 2006. Angloplat also named Khumama Platinum, an empowerment consortium that counts black-gold group Khumo Bathong Holdings (KBH) as a one-third shareholder, as its 50 percent partner on the project. The empowerment group would bring two of its own properties into the joint venture - one deep and another shallow reserve - and would fund 50 percent of the total development. Paseka Ncholo, the chief executive of Khumama, said the development of the underground mine would cost about R2 billion. "It's a lot of money, but its down from about R3.6 billion when we started looking at the project," he said. Ncholo confirmed that the mine was expected to produce somewhere in the region of 200,000 ounces of platinum each year. Rene Hochreiter, platinum analyst at Nedcor Securities, said the project was part of the group's broader expansion plan and a good move for Angloplat. "I like it because its got a good platinum to palladium ration, about 2:1. Its better in the South than it is in the North," said Hochreiter. Although Angloplat and Khumama are essentially equal partners on the mining end of project, analysts expect the final earnings split to be slanted in Angloplat's favour. The platinum major will more than likely bank a management fee for running the mine and pocket the lion's share of the total margin once it has refined the metal.

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PHARMACEUTICALS

Nevirapine decision slammed

The Congress of SA Trade Unions and the Independent Democrats have come out in opposition to the Medicine Control Council's (MCC) rejection of a study on the anti-Aids drug nevirapine. The MCC has called for new data on the safety and efficacy of nevirapine from pharmaceutical firm, Boehringer Ingelheim. 
Failing this, the drug's registration for use in preventing mother-to-child transmission of HIV would be withdrawn, said acting Cosatu spokesman, Patrick Craven. 
"While we recognise that the MCC has the responsibility to protect the public by guaranteeing that all drugs have been comprehensively tested and are completely safe, we are concerned that lives could be lost as a result of this further delay in allowing the distribution of nevirapine to HIV-positive pregnant women," said Craven. 
"Cosatu trusts that this decision to reconsider the use of nevirapine will not become an excuse for any further delay by the government in signing the draft National Economic Development and Labour Council agreement on a national plan for the prevention and treatment of HIV/Aids, which has been on the table since October 2002 and that antiretroviral treatment will be made available to all who need it with the utmost urgency in all state hospitals and clinics," said Craven. 
Health spokeswoman for the Independent Democrats (ID), Sonja van der Sandt called for the MCC to fully substantiate the decisions it had reached on the drug. "We cannot afford continuous delays in the availability of drugs to our mothers as we are already experiencing hurdles in the process of making HIV drugs freely accessible to the South African public. We cannot deny women their right to have healthy children, so we have to assist in the PMTCT (prevention of mother to child transmission)." 
If the MCC deregistered nevirapine, it would have to suggest viable alternatives or suitable recommendations for the implementation of the PMTCT, van der Sandt said. 
ID leader Patricia de Lille said that her party strongly believed that every HIV positive South African should be entitled to the free combination triple therapy drug cocktail which would cost government R350 per month for the required dosage for one infected person. 
"For the price of a T-shirt, we would be able to save a life," she said. 

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TRADE RELATIONS

Iran Trade Relations

Pacts between South Africa and Iran were sealed on a range of issues on July 22 at the end of the seventh session of their joint bilateral commission. These included a draft treaty on extradition, one on mutual legal assistance in criminal matters, and a memorandum of understanding on illicit drug trafficking. Programmes of co-operation on health and culture were also signed after the two-day event in Pretoria. Foreign Minister, Nkosazana Dlamini-Zuma, and her Iranian counterpart Kamal Kharrazi said the agreements would serve to cement the healthy ties between the two countries. They said oil companies from both sides were also discussing partnership agreements worth billions of rands. Such joint investments could rise to R30billion in the coming years, Kharrazi said on July 21 at the opening of the session. "Iran declared its readiness to increase crude oil sales to South Africa and -- in case of need -- to utilise the strategic oil storage in Saldanah Bay." The two ministers said in a statement on July 22. Broader co-operation was also envisaged in the fields of energy and electricity, tourism, justice, health, culture, and women's affairs.

Egypt 

Foreign Affairs Minister, Nkosazana Dlamini-Zuma, has urged South Africa and Egypt to intensify trade relations for the greater benefit of the two countries. Opening the sixth Session of South Africa-Egypt Joint Bilateral Commission (JBC) in Pretoria July 14, Dr Dlamini-Zuma said both countries should identify obstacles that were blocking trade and come up with concrete interventions to allow the flow of trade between the two. The minister was addressing her visiting Egyptian counterpart Ahmed Maher, who is accompanied by a delegation of officials and business representatives on a two-day visit to South Africa. They will explore joint cooperation in the implementation of the New Partnership for Africa's Development (Nepad), the African Union's (AU) socio-economic recovery plan. On bilateral cooperation the two countries will discuss matters in the fields of health, transport, public enterprises, communication, justice, tourism and energy. South Africa and Egypt enjoy good political relations and have signed a number of memorandums of understandings and agreements in the fields of tourism, energy co-operations, legal matters and arts and culture. However, trade between the two countries has been minimal with South Africa's exports to Egypt standing at about R275million while imports from Egypt were standing at about R72million in 2001.

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TRADE & FINANCE

South African Cinema Chain Sells Assets 

Ster Century Europe, which is jointly owned by Primedia and Kersaf, has sold its businesses in Spain, UK and Ireland for about $37m, which almost closes "an unsatisfactory period of international cinema expansion", according to Primedia CEO, William Kirsh. The Spanish cinema assets, which comprises two multiplexes with a total of 21 screens, were sold to Abacocine for about 10,6m, while the assets in Britain and Ireland, comprising seven multiplexes with 87 screens, were sold to Aurora Cinemas for $27m. The deals leave Ster Century Europe with only its site in Slovakia, which is one multiplex with eight screens, and it is in the process of being sold. Kirsh said the group was pleased with the sale, although the ultimate prices realised were less than expected. The disposals would eliminate the significant losses from Ster Century Europe.

US-South Africa Trade

US companies operating in South Africa are adopting a more favourable outlook on local domestic investment, a survey conducted in June by the American Chamber of Commerce has revealed. Of the more than 80 members of the chamber who responded to the annual survey, more than half indicated that the economic climate in South Africa was either excellent or good, with 40% reporting it as variable. Another encouraging trend, said Grant, was that 41% of SA-based US companies responding to the survey, said they planned to invest more in the coming year. More than a third of the companies, or 36%, have unchanged investment plans and only 14% said they planned to invest less. The survey also showed that in the past year the number of members that have increased confidence in government's ability to improve local business environment has tripled. Chamber member companies, whose interests span a broad spectrum of business sectors in SA, are estimated to employ more than 125,000 people and are involved in community projects worth R1.5bn, with a major part of this spending going on education, health and skills training. Factors that encouraged local investment most were a stable and healthy economy, and a stable government. Other factors cited were the low cost of labour as a result of rand values and of doing business generally; the excellent SA business infrastructure; and the future business potential of SA. Five local key issues emerged as potential barriers to investment relative to investment in other countries. These were business crime and personal security matters; over regulation applying to black economic empowerment equity; exchange control; and labour issues.

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TOURISM

Cape Town Better Long-Haul Deal Than Sydney

CAPE Town outclasses competitor Sydney as a better value for money long-haul destination for overseas tourists, according to a global hotel benchmark survey by Deloitte & Touche, Business Day has reported.
This is despite Cape Town hotels pushing up their average room rate by 20% to R577 for the first six months of this year and the rand strengthening against all major foreign currencies. Sydney upped its rate by 2% to about R742.
The findings of the survey reinforce the image of Cape Town as a destination of choice for European and US tourists, and are likely to propel the Mother City into the world's top cities ranking.
It also indicates that Cape Town is a bigger money-spinning attraction than Sydney, despite both cities possessing similar striking features both are set along the ocean with a huge variety of leisure activities and a gateway to a continent that has plenty to offer the adventurous tourist.
Sydney's successful hosting of the 2000 Olympic Games, and the upcoming Rugby World Cup show it is a proven competitor for the same tourist dollar that Cape Town is wooing.
The survey, which tracks the performance of over 6000 hotels outside of northern America, has allayed fears that Cape Town could price itself out of the market.
The survey shows that overseas visitors prefer Cape Town for, among other things, its lower accommodation rates and minimal time difference with Europe.
Deloitte & Touche partner Rob O'Hanlon says the survey illustrates that the similarities between Cape Town and Sydney extend beyond the physical attractions to the hotel industry.
For example, Cape Town achieved an average occupancy level of 70% for the six months, while Sydney's grew 72%.
However, it is impressive that Cape Town has maintained its 2002 occupancy levels, while achieving a 20% increase in revenue per available room, compared to Sydney's 6% over the same period.

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UN HUMAN DEVELOPMENT REPORT

South Africa 111th

South Africa is ranked 111 out of 175 countries measured by the United Nations Development Programme (UNDP) in its 2003 Human Development report. It is one of nine African countries to be ranked as having "medium human development". Only the Seychelles made the "high human development" list. Top of the list is Norway, bottom is Sierra Leone. Eight "millennium development goals" were agreed to by 147 world leaders at the UN-sponsored Millennium Summit in September 2000. The goals are to eradicate extreme poverty and hunger -- meaning the number of people living on less than US1 (about R7.50) a day -- to achieve universal primary education, promote gender equality and the empowerment of women, reduce child mortality, improve maternal health, combat HIV/Aids, malaria and other diseases, ensure environmental sustainability and develop a global partnership for development. The statistics used are those for 2001, and the target date for achieving the goals is 2015. In South Africa less than two percent of people lived below the UN's extreme poverty line, and 27 percent of children under five were underweight for their age. In 2000/2001 89 percent of children were enrolled at schools, and 75 percent reached Grade Five. The literacy rate of people aged 15 to 24 increased to 91.5 percent from 88.5 percent in 1990.

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