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Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 104,235 113,300 127,900 35
GNI per capita
 US $ 2,600 2,820 3,060 94
Ranking is given out of 208 nations - (data from the World Bank)


Area (




Thabo Mbeki

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: 20 - (02/09/03)

AIDS Plan Announcement welcomed
Campaigners have welcomed South Africa's decision to introduce anti-retroviral drugs to treat people who are HIV positive following the National AIDS Conference, which ended August 6. This follows years of criticism and public pressure. Some 4.7 million South Africans, one in nine, are infected with HIV/Aids, the world's highest number. Aids activists who led an increasingly angry campaign demanding drug treatment, welcomed the government's move but cautioned that they had been disappointed before. Opposition parties also welcomed the move. The New National Party (NNP) said it was pleased the government had heeded the "almost universal call" for an operational roll-out plan for such treatment although this had taken a long time. The Inkatha Freedom Party (IFP) August 9 welcomed the government's decision, saying it was long overdue. The Democratic Alliance said the announcement looked good on paper but the real test would be the manner in which it would be put into action. Former President, Nelson Mandela, joined millions around the country August 9 in praising the government's U-turn on rolling out antiretroviral drugs. Mandela - who had criticised the government for delaying providing the drugs - and his Nelson Mandela Foundation were "overjoyed" by the government's announcement, the organisation's chairman, Professor Jakes Gerwel, said. The government finally put an end to its 18-month delay in signing an agreement with the Global Fund to Fight Aids, TB and Malaria August 7 - giving South Africa access to $41-million for the fight against the pandemic. The government announced that it had given Health Minister, Manto Tshabalala-Msimang, until the end of September to develop a detailed operational plan for rolling out antiretroviral drugs. The Cabinet decided to adopt the recommendations of the Joint Health and Treasury Task Team. On the same day, Health Minister, Tshabalala-Msimang, issued a conciliatory statement acknowledging that antiretrovirals "can help improve the condition of people living with Aids". The statement was a major departure from earlier utterances in which she indicated that she doubted the efficacy of the drugs. The move was welcomed by the UN special envoy for HIV/Aids in Africa.

Gold - Ashanti Take-over
Anglogold took a step to becoming one of the world's biggest gold producers August 5, putting a $1,09bn offer on the table for Ghana's Ashanti Goldfields. Ashanti said that it accepted the offer with a unanimous vote from its board. Crucially, Lonmin Platinum, which is listed in London and has a stake of 27.6% in Ashanti, said that it too backed the AngloGold offer. If the two companies are combined, the new company would create Africa's biggest gold producer, with output of 7.3-million ounces of gold last year. This would put it on a par with the output of Newmont Mining, the world's top gold producer. AngloGold CEO, Bobby Godsell, said he believed the transaction, once completed would be the biggest cross-border deal to have taken place to date between two African companies. Ashanti CE, Sam Jonah, would be president of the new company. The deal awaits approval from the Ghanaian government, which has the power to veto the move. The government, which has a 17% stake in Ashanti, has appointed Société Générale SA to advise it. The takeover of Ashanti would be a significant boost for AngloGold, increasing its geographical spread of assets, adding reserves and giving it scope for future growth. Randgold confirmed a rival bid August 8, unveiling a $1.5bn offer for Ashanti, a 33 percent premium on top of the AngloGold offer. Randgold offered one Randgold share for every two Ashanti shares. AngloGold's offer, which would see Ashanti shareholders receiving 26 AngloGold shares for every 100 Ashanti shares held, values the company at $1.1bn. AngloGold finance director, Jonathan Best, highlighted market concerns around Randgold's ability to pull off its bid August 10, saying he would suggest that Ashanti shareholders consider the reaction of Randgold shareholders when considering the group's bid. Randgold Resources shares lost 12 percent in New York August 8 on announcement of the bid. 

Stocks Set to Perform
Financial shares in South Africa are as cheap now as they were in the global economic crises of 1974, 1982 and 1989, which were followed by outperforming periods, yet investors do not seem to be interested. Kokkie Kooyman, portfolio manager at Coronation Fund Managers, says outperforming periods generally follow the crisis periods. "The point of time we are at now is post-crisis and we are experiencing the conditions that accompany outperforming periods," he says. Dennis Dykes, chief economist at Nedcor, says investors are holding back and waiting for some sort of momentum to develop before they invest again. Aggressive interest rate cuts are set to give South Africa's equities a major boost in the coming months, with asset managers predicting a strong performance on the JSE Securities Exchange SA. Although a strong rand may hurt the equities market overall especially dual-listed and hedged stocks the banking and retail sectors are likely to show strong growth on the back of domestic growth fuelled by interest rate cuts. Over the next few years there will be a greater demand for borrowing and other bank products. Global equity markets recently experienced an upswing, but the critical question for South African investors is whether the recent bounce can be sustained. Dykes said the current global situation is the only thing holding investors back. Although banking stocks are cheap and could bring good returns, there are some short term risks that would effect these stocks. Kooyman cites the risk of a reversal of South Africa's capital inflows as an example of a short-term risk. However, for this to happen, there will have to be a strong recovery in US growth, pulling capital back into the US and causing the rand to slide.

Namibia and South Africa Gas trade Agreement
Namibia and South Africa have set the parameters for shipping natural gas across their borders and as far as Mozambique. The Bilateral Gas Trade Agreement signed between Mines and Energy Minister, Nickey Iyambo, and the South African Minister of Minerals and Energy Affairs, Phumzile Mlambo-Ngcuka, in Windhoek August 1, also outlines the conditions for laying pipelines to the Western Cape, to transport gas. Speaking at a press briefing at State House, the South African Trade and Industry Minister Alec Erwin said that the agreement had "nothing to do with [the] Kudu [gas field]" but will add value to the project as it is developed. The Kudu Natural Gas project is exploring the extent of natural gas reserves off the southern coast of Namibia to determine the viability of building southern Africa's first two gas-fired power stations: at Oranjemund and Cape Town. Asked whether South Africa would consider becoming directly involved in the project, Erwin would only say that "if there's gas we will develop it" but that at this stage the future of the project was in the hands of the private sector. A year ago Shell Exploration and Production Namibia, which was drilling for gas reserves, pulled out of the project saying the limited reserves would not be economically viable. But in March, the oil and gas exploration results of a key player in the Kudu project, Energy Africa, said the project showed considerable potential. The project's commercial viability should be known by the end of this year.

Black Economic Empowerment and Foreign Companies
The Broad-based Black Economic Empowerment Strategy will not impose any shareholding structural changes on foreign companies that have intentions of investing in South Africa. Instead it will only set the BEE criteria on foreign companies when they want to apply for government tenders or contracts in that they take on equity partners to be part of the tendering processes. Briefing foreign journalists about the BEE strategy in Johannesburg August 22, Lionel October, the deputy director-general in the trade and industry department said government would not tamper with ownership structures that had subsidiaries in the country. 'BEE on foreign companies is not about reparations or redistribution of wealth but it is about transforming the South African economy. 'BEE is not going to impose any rigidity on foreign companies or tamper with ownership structures of companies that are listed on foreign exchanges such as Microsoft and so forth,' said Mr October. He said such companies should form joint ventures with empowerment companies only when they bid for government contracts or tenders. However, their shareholding structures would remain. Trade and Industry Minister, Alec Erwin, introduced the BEE strategy in March to address economic imbalances with the aim of including the majority of South Africans in the economy while accelerating economic growth. 

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Department of Agriculture adopts new industrially based policy

The Department of Agriculture is to introduce a new industrially based policy to ensure the future sustainability of agricultural projects in the province, East Cape News reported on 21st August.
This was disclosed by MEC for Agriculture, Max Mamase, whilst addressing a meeting of the Ncora Trust at Ncora.
The meeting had been requested by the Ncora Trust board in order to clarify the department's position regarding the use of equipment belonging to the former government-owned Ncora Irrigation Scheme.
The meeting was attended by representatives from the Department of Public Works, the Industrial Development Trust (IDC), the Chris Hani District Municipality, regional officers from the Department of Agriculture and members of the Ncora Trust board.
Mamase told the Ncora Trust board members that in future agricultural projects would have to draw up development plans based on sustainable anchor crops.
Mamase said the department of agriculture wanted the schemes to grow sustainable crops so that when the department stopped assisting them they would be able to continue on their own.
He emphasised that "crop growing projects should have an anchor crop so that if crops that were planted on trial failed the anchor crop would sustain the project."
"The department of agriculture is prepared to financially help all the agricultural schemes that were previously state-owned on condition that there was stability, peace and tranquillity among the communities owning such schemes," Mamase said.
Mamase also announced that the department had entered into a mentorship agreement with AgriSA to help emerging farmers.
Departmental spokesperson, Mthobeli Mxotwa, said that Mamase had also disclosed that the department would buy new tractors that would be given to suitably qualified agricultural projects in the province.
Referring to the Ncora Trust, Mxotwa said that "Ncora is one of the former government owned agriculture schemes which were disposed of in 1997 to the private sector." He said that the Ncora Trust's board had requested Mamase's permission to repair and use the old Irrigation Scheme equipment. Mxotwa said that the MEC had advised the board that "it would not be wise" to use the ten-year-old equipment as repairs to it could be costly.
Mamase said the board should instead dispose of the equipment and deposit the proceedings with the Provincial Treasury. He said departmental funding would then be diverted to either the Ncora Trust agricultural project or to the Qamata agricultural scheme, "depending on which scheme had tranquillity." Mxotwa also announced that the Shiloh Agriculture Scheme in Whittlesea would be funded for the last time this year.

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South African Airways Defies Industry Odds

Despite the declining airline industry worldwide, South African Airways (SAA) has made a record gross profit of Rand545 million in 2002/03. According to the President and Chief Executive Officer of SAA, Mr Andre Viljoen, the airline made gross loss of R834 million 2001/02. He said the growth was due to "SAA realigning its structures, improving customer service, improving revenue management and yields, controlling costs, enhancing operating efficiencies and embarking on renewing its fleet." These improvements brought about an increase in passenger and cargo revenue. Said Viljoen: "Passenger revenue increased from R11,178 million in 2002 to R13.688 million [while] cargo increased its revenue to R1,567 million from R1,394 million in 2002." The airline however, experienced an increase in operating costs of 12.1 percent of R16,797 million from R14,984 million in 2002. The CEO attributed the increase to "higher fuel, labour, distribution, aircraft lease, and depreciation costs." SAA currently operates a fleet of 64 aircraft. 

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Standard buys SA online bank

Standard Chartered announced a move into full-service banking in South Africa recently with the purchase of an online bank and that it obtained a local banking licence.
In an upgrading of an old relationship with South Africa, the bank said it had bought 20twenty, a Cape Town-based digital financial services group. The bank also said it had received authorisation from the South African Reserve Bank to open a branch.
The bank will relaunch 20twenty in the first quarter of next year and upgrade its Johannesburg representative office to a branch, it said.
"We see the consumer bank as the engine for growth," said Peter Sullivan, the bank's chief executive for Africa. The purchase is subject to approval by South Africa's finance ministry, which Mr Sullivan said he expected by September 1st.
Standard Chartered is already present in 13 other African countries, with a total of 5,000 employees on the continent. The bank, which left South Africa during the apartheid era in 1987 and re-established its office in 1992, claims to be one of the best-known brands on the continent.
But its push into South Africa launches it on one of the continent's most heavily banked financial markets, dominated by four well-entrenched local institutions.
Standard Chartered bought 20wenty from the liquidators of its former owner, bankrupt group Saambou, for less than US$10m (£5.9m).
Christo Davel, 20twenty's founder and Standard Chartered's new local head of consumer banking, said about 94% of the service's customer had kept their accounts, and 30 to 40% were still active.

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Companies sign $200m pact on gas facilities

Domgas Nigeria Limited, Lead bank and Fieldstone African Limited of South Africa have signed an agreement for the development of natural gas facilities in Lagos at a cost of valued at $200 million (N25.4 billion), Daily Trust has reported.
The latest edition of "Oil International", made available to newsmen in Abuja, said that the deal was sealed last week.
It stated that Mr Rashid Huthman, Chairman, Domgas signed on behalf of his company, while Mr Oladele Olashore and Mr. Siyanga Malumo appended their signatures for Lead Bank and Fieldstone respectively.
Domgas is a local supplier of domestic natural gas in Lagos and other cities in Nigeria.
"With the new facilities in place, Lagosians and indeed Nigerians would begin to enjoy a more reliable alternative source of energy for domestic purposes", Huthman said at the ceremony.
He pointed out that the venture would enable Domgas to hook about two million new customers to its network.
According to him, the company has created the desired awareness among Nigerians that natural gas remained the safest, cheapest and environment-friendly.
He said the company had invested hugely on insurance that covered both their equipment and the lives of their customers.
The chairman said the three organisations had agreed to establish natural gas vehicle filling stations in Lagos.

Black bidders rush for PetroSA Sable stake

PetroSA received 47 expressions of interest from black companies for its 9% stake valued at R114m in Sable Mining Lease before the deadline for submissions, Business Day has reported. 
PetroSA sees this endeavour as part of its contribution to government's economic empowerment strategy. 
Government plans to have 25% of the sector in which PetroSA operates under black ownership by 2010. The state petroleum company holds a 60% interest in the Sable Mining Lease, an oil-mining project off Mossel Bay. 
US-based partner company Pioneer Natural Resources holds the remaining 40%. 
Ernst & Young director Ajay Lalu, who represents one of the three corporate and legal advisers to PetroSA on the bidding process, said that 57 bids were received, but 10 were turned down for late submission. 
"We are pleased with the high number of interested parties. It exceeded our expectations, especially taking into consideration one of the criteria was that each group had to have not less than 500 participants and representatives from across the country," he said. 
Lalu said the way to proceed was to evaluate the submissions and within the next week draw up a shortlist of candidates. 
"Those shortlisted will be given access to the data room with specific information on Sable and figures," he said. 
Thereafter a preferred bidders' list would be put together, he said. It is hoped that the whole transaction process will be concluded by November. 
Lalu said the Sable oilfield had already started producing oil. 
"We want to ensure that the winning bidder begins to participate in the project as soon as possible." 
Sable, with a possible lifespan of six years, is expected to produce up to 25-million barrels of oil over the next three years. 
Sango Ntsaluba, a co-founder of black accounting and auditing firm SizweNtsaluba VSP, said the fact that Sable was already producing oil had attracted many willing bidders . 
Ntsaluba, representing one of the bidding groups, Mtha Investments, a broad-based group of close to 1000 members from around the country, said it would be "no problem" to source funding for the deal. 
"Finance houses are ready to come on board because they see that Sable is already producing oil," he said. 

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Companies seek big rate cut

South African companies are clamouring for a large interest rate cut ahead of a closely watched central bank meeting scheduled for mid-August, the Financial Times has reported.
Economists expect the South African reserve bank's monetary policy committee to cut lending rates by as much as 150 basis points when it convenes for a two-day meeting.
South African exporters, from winemakers to gold miners, say the country's high interest rates are proving attractive and supporting the appreciating rand exchange rate, thereby sapping their competitiveness on foreign markets.
Anglo American became the largest company to say the strong rand was eroding its export earnings, despite increased headline earnings of US$856m for the first half.
The London and Johannesburg-listed company said exchange rate factors had cost the group US$231m during the period, with the group's platinum, coal and gold businesses hardest hit. Tony Travhar, chief executive, said the outlook for the second half remained "challenging," particularly because of the currency's continued strength.
Other South African companies, from mining concern GoldFields, to financial group Nedcor, have reported rand-related hits to their first-half earnings in their latest reports. After hitting a low of R13.80 to the dollar in December 2001, by 8th August the currency has rebounded beyond R7.40 per dollar.
High real interest rates are buoying the rand by drawing local and foreign money into debt securities. Even after a point and a half cut in June, South Africa's prime rate is 15.5 per cent, about nine points above inflation.
"Move investors are looking for yield rather than growth of equity, so they're looking at interest rates," said Mike Schussler, economist at Johannesburg-based stockbrokers, Tradek.
But economists said strong economic fundamentals were also supporting the currency, suggesting further cuts might not weaken the rand. Despite the strong currency South Africa continues to run a trade surplus. Its tourism industry is booming amide a global slump.
The government has followed conservative fiscal polices for several years, and high commodity prices favour its resource-dominated industry. "The government has had to work a lot harder because of the Afro-pessimism thing," said Marisa Fassler, South African economist with JP Morgan.

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South Africa Signs Pact With Kenya

Foreign affairs minister, Nkosazana Dlamini-Zuma, and her Kenyan counterpart, Kalonzo Musyoko, have signed a Memorandum of Intent in Pretoria August 5 to consolidate bilateral relations between the two countries. The agreement seeks to work towards the establishment of a framework on economic, political, technical, scientific, security and cultural fields based on the principles of equality and reciprocal advantages. Speaking at the signing ceremony, President, Thabo Mbeki, said South Africa valued the important place that the east African country occupied in the continent. 'Both sides thought it was important for us to move with some speed to strengthen bilateral relations...the agreement just signed provides this framework,' he said. He added that a joint commission headed by the two ministers would be established to ensure that there were institutions that would give expression to those bilateral relations. On their meeting, which took place earlier, President Mbeki said they discussed the enhancement of trade relations, saying the trading balance between the two countries was 1 to 20 in favour of South Africa. 'It is quite clear that more needs to be done to encourage greater flows of Kenyan products into the South African market and greater flows of investment from South Africa into Kenya,' said the President.

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South Africa's Call Centre Revolution

South Africa is close to a new wave of corporate investment, embarking on a global marketing drive with the goal of promoting South Africa as the premier outsourcing destination, particularly in the call centre space. The global marketing drive started with a roadshow by Trade & Industry Minister Alec Erwin to the US in May. "It was a resounding success," says Angelo Manzoni, director of business process outsourcing (BPO) and IT-enabled services at the Department of Trade and Industry. Manzoni says South Africa's advantages include. The right time zone to offer the UK and Europe services in their office hours (and the ability to offer the US a 24-hour service). A huge pool of unemployed, but educated people from which to draw expertise for call centres, which would require minimal training. A reliable electricity supply. First world telecommunications and IT infrastructure. Commitment from government and industry to make the call centre drive work. The next international road show will be the Birmingham Call Centre exhibition in mid-September. The DTI is taking along a number of different companies to showcase South African offerings.

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Transport Infrastructure to Get Billions

The government and parastatal Transnet are to pump billions of rands over the next three years into upgrading South Africa's road, rail, ports and air traffic infrastructure. In terms of the intervention, between R2-billion and R3-billion is to be invested in railway infrastructure and another R2-billion a year in roads. South Africa's ports would need an investment of about R1.4-billion. South Africa's ports would need an investment of about R1.4-billion. The exact amount of money required has not yet been quantified. Trade and Industry Minister Alec Erwin said the figures would have to be finalised in terms of the national budget by October. He said there would be no need to borrow additional money for the project. "The funds we are looking at are within our macro-economic projections as to what is sustainable." The intervention was needed, Erwin said, to help the country's infrastructure keep up with economic growth. It did not reflect a change in government policy towards parastatals. "If we were to allow the self-financing route to go exactly as it is now, it would be too slow. We need to speed up." Not many economies in the world experienced increases in traffic volumes over a five-year period of 20 percent or more, Erwin said.

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