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SOUTH AFRICA


  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
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)

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Area (sq.km)
1,219,912

Population
43,586,097

Capital
Pretoria

Currency
rand

President
Thabo Mbeki


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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: 027 - (01/04/04)

27 April 2004 will be the tenth anniversary of South Africa's first democratic elections. As South Africa prepares to celebrate 10 years of democracy, it will also carry out elections to elect a new president. The new president will be elected this year after South Africa's third polls since attaining freedom in 1994. The celebrations will take place on 27 April, South Africa's Freedom Day. South Africa continues to promote regional integration through SADC and SACU and has also played a leading role in the transition of the OAU to the AU as a more cohesive pan-African body and in the conception of NEPAD. The AU launched the first Pan-African Parliament (PAP) 18 March, and the Peace and Security Council (PSC) 15 March. Foreign Affairs Minister Nkosazana Dlamini-Zuma says the establishment of the two most important bodies within the African Union (AU) has put the continent on a path towards sustainability. She said the two institutions would go a long way to build African unity and improve security for Africa's people, coupled with creating sustainable conditions for political stability. 
Money supply growth accelerated sharply during March, signalling a build-up of inflationary pressure in the economy that analysts say could result in the Reserve Bank hiking interest rates by the third quarter. However, the rand's strength, if sustained, could improve the inflation outlook. Coupled, most economists expect with rising oil and food prices that the Bank's targeted inflation measure, CPIX (consumer inflation excluding mortgages), will move close to, or perhaps breach, the 6% upper limit of the inflation target before the end of the year. South African exports to the UK grew 8% last year, despite the strong rand, according to Stephen Brown, head of Britain's trade and investment promotion body. He said during an interview 15 March that the sharp growth in trade was partly attributable to the opportunities opened up by South Africa's recent free trade area accord with the European Union. Trade with China continues to expand with marked increases in platinum sales by Anglo Platinum. Profits at South Africa's platinum and gold producers, which bore the brunt of the rand's appreciation in 2002 and 2003, may be turning the corner as metal prices climb. While the rand gained 40% against the dollar in 2002 and a further 28% last year, it is little changed so far in 2004 and well off the 6.102 to the dollar peak it reached on December 3. At the same time, precious metal prices have risen. Platinum has jumped 12% so far this year to its highest in 24 years, building on its 36% gain last year. Platinum mining by-product palladium has surged 45% this year. Meanwhile the price of gold, traditionally South Africa's biggest export, has slipped recently, but hit 15year highs in January and rose 19% in 2003. Earnings at companies, including Anglo American Platinum and AngloGold, the biggest South African producers of platinum and gold, are forecast by analysts to rise this year. Steel exporters are more concerned by the continued rand strength. Only 8% of steel and engineering companies in South Africa believe they can export profitably at an exchange rate of R7 to the dollar or less, according to a recent survey. Steel and engineering activities represent a large part of South Africa's manufacturing sector. Companies in this sector employ 371,000 people, or close to a third of all formal manufacturing jobs. Vehicle exports recovered well last month after a big drop in January, which led to concern that the strong rand was wiping out lucrative car export revenue. Car exports almost doubled from about 4550 units in January to about 8650 units in February, with the biggest gains made by BMW and DaimlerChrysler. The outlook for the automotive industry overall was upbeat. This was also because of positive consumer and business sentiment, stable interest rates and low vehicle-price inflation projected for the bulk of the year in the domestic market.

South African Investment in Africa
High levels of South African investment in other African countries are raising fears that it is becoming the continent's newest coloniser. Representatives of South African firms and managers of parastatals have streamed into the continent since 1994. What was not expected is the growth of South African investment in Southern Africa and the continent as a whole. Between 1994 and 2002 South Africa's announced direct investment in Southern African Development Community (SADC) was 32% (in US dollar terms) of total foreign direct investment (FDI) in the region. The speed with which South Africa has become an important, perhaps the most important, source of FDI in Africa is astonishing. South Africans are keen to conquer under-explored markets. In Mozambique, for instance, South African investment is the biggest role-player in economic development. BHP Billiton has invested huge amounts there via the Mozal aluminium project. BHP is Mozal's 47% holding partner, along with the South African SOE the Industrial Development Corporation (IDC) with 24%. Mitsubishi has 25% and the Mozambican government 4%. South African investment was 31% of the total announced FDI in Mozambique (in dollar terms) between 1994 and 2003. Since 1995 South Africa has surpassed Portugal's investment in its former colony. But what of the growing resentment of South African economic dominance? South Africa may have failed in Zimbabwe, but elsewhere its marketing and diplomacy seem adequate. More could be made, though, of the positive role South African investment has played - in job creation, for instance. Also, reciprocal investment needs to be encouraged. African countries have invested about R627-million in South Africa, in a handful of investments since 1994. Yet billions have gone from South Africa into the rest of Africa.

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AUTOMOBILES

R12bn VW Deal


Volkswagen SA has landed a R12bn, six-year contract to export car engines to Germany over the next six years. Trade and Industry Minister Alec Erwin said 30 March at the launch of the contract in Uitenhage that it showed South Africa's vehicle industry was capable of supplying increasingly sophisticated components to the international market. Volkswagen SA won this contract in the face of competition from other Volkswagen plants around the world. The group said that it planned to export 35,000 units next year and wanted to increase production to 67,000 units in the future. The deal will push engine and engine component exports into second place on the list of total component exports, behind catalytic converters. While South Africa had built a good reputation for exporting catalytic converters and leather interiors for cars, Erwin said this deal demonstrated that South Africa could also export more complex components. Industry watchers have said that one way of achieving the goal of being a significant player in the global vehicle-manufacturing sector would be to produce more sophisticated components. The contract will see Volkswagen export 440,000 units over six years, creating 250 jobs once production reaches full capacity. Volkswagen SA MD Andreas Tostmann said the deal would created a further 130 jobs at the company's suppliers. The group had invested about R240m in its facilities in Uitenhage to enable it to fulfil the contact.

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AVIATION

SAA 

Transnet says it has started its search for a new chairman for its subsidiary South African Airways (SAA) following the departure of Don Ncube. Ncube's three-year contract expired in February, and he has not made himself available for reappointment. He will, however, continue performing his duties until a replacement has been found. Transnet chairman Bongani Khumalo says government, the sole shareholder of the Transnet group of companies, has been "duly informed" about Ncube's decision and a replacement will be found soon. "We are in consultation with government on the question of succession and we will announce the new chairman in due course," says Khumalo. Ncube has dismissed as unfounded rumours that he was leaving because of SAA's R6bn hedging loss posted last year. "I was not asked or forced to leave. I am leaving because my term of office has expired." Ncube joined SAA in 2001, a year that will go down in history as a turbulent period for the aviation industry worldwide. In 2001 SAA posted a headline loss of nearly R1bn, incurred during the management of former CE Coleman Andrews. The weak rand affected its domestic operations, and while the airline was still trying to recover from that loss, the September 11 terrorist attacks hit the US. The attacks led to many airlines going bust or merging with others to stay alive. SAA was one of the few airlines to weather the storm. In fact, its operational performance returned to the black, enabling it buy a new fleet to strengthen its dominant position in Africa and explore new routes in other parts of the world. However, the huge hedging loss resulted in SAA being declared technically insolvent, forcing government to issue a R3.5bn guarantee to the airline's lenders. It also recently announced that it had allocated another R3.5bn to cushion the airline. The public enterprises department says it is considering removing SAA's treasury department and transferring it to Transnet or the national treasury. A decision is expected soon.

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BLACK EMPOWERMENT

US - Support for Black Economic Empowerment

The United States has reiterated its support for Black Economic Empowerment (BEE) but trade negotiators have called for transparency in the process, says government's chief trade negotiator Xavier Carim. Briefing the media 8 March about the outcomes of the last round of Free Trade Agreement (FTA) talks between the Southern African Customs Union (SACU) and the US in Namibia, Mr Carim said US negotiators "had no problem with BEE." SACU member states - Botswana, Namibia, Lesotho, Swaziland and South Africa - launched the FTA negotiations last year to see increased investment in sub-Saharan Africa by US companies. The issue about BEE came onto the fore after some US companies doubted whether the policy would not have an effect on their investments in South Africa. But according to its strategy, BEE will not affect any share-holding structures of any foreign company. South Africa launched the strategy last year, to accelerate economic empowerment among the majority of black South Africans. "The US supports BEE and understands it as you know they also have a long history of affirmative action. But all they said was that empowerment needs to be transparent but they have no problem with BEE," said Mr Carim. Mr Carim said US negotiators were in agreement with the way BEE was implemented but warned against any double standards applied to local companies to the detriment of foreign companies.

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ECONOMIC RELATIONS

SADC Plans to Create Common Market By 2012

The Southern African Development Community (SADC) member countries intend to create a common market in the region in 2012. "The plan is to have member states sign a free trade agreement by 2008, customs union protocol in 2010 and a common market pact in 2012," SADC Executive Secretary Prega Ramsamy said 9 March. The plans are within a reasonable time frame even though formidable hurdles still haunt this promising 14-member economic grouping. "Eight years is a good period to work on to overcome major obstacles towards the formation of a common market," says prominent economist, Dr Samuel Undenge. Talk of a Sadc common market has been swirling from the 1990s with member states expressing their commitment towards the creation of it at a time when most regions are creating economic blocs to survive or tap opportunities that go with integration. Last September, the Development Bank of Southern Africa and the African Development Bank signed a US$100 million loan for the improvement of infrastructure services within the SADC region, boosting efforts to integrate the countries by 2012. Political will, economists say, is a major ingredient for the recipe of a successful common market. Sadc member states include Angola, Botswana, the DRC, Lesotho, Malawi, Mauritius, Mozambique, Namibia, the Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. The region has significant and important strategic mineral reserves, which include copper, coal, natural gas, cobalt, diamonds, gold, nickel and platinum while Angola is heavily endowed with petroleum. Sadc members have in the last few years taken giant steps towards greater co-ordination in health, finance, investment, monetary affairs, economics, politics and other critical issues of interest to the region. A number of protocols have been ratified clearing the way for economic integration. Trade and Industry Minister Alec Erwin believes that high import tariffs charged by Europe and United States on Africa's agricultural products are a drag on development on the continent. He said one of the best ways to beat the problem was for countries to increase trade with each other. "At the World Trade Organisation (WTO) meeting in Cancun last year, we were pushing strongly to deal with tariff escalation, which affects all agricultural products," Erwin said. "We have to open our economies to each other, we only need to look at Europe to see how they have benefited."

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FOOD & DRINK

Coca-Cola Sabco Puts Fizz in Asian Markets

Port Elizabeth-based bottler Coca-Cola Sabco says it will acquire the Coca-Cola Company's bottling operations in Vietnam, Sri Lanka and Nepal, almost doubling its customer base and expanding its influence across southern and eastern Africa into Asia. Both boards have approved the acquisitions, and a conclusion is expected shortly. The multimillion-dollar purchase involves three plants in Vietnam, two in Nepal and one in Sri Lanka. Sabco, which operates 21 plants serving 156-million customers in South Africa, Ethiopia, Uganda, Kenya, Tanzania, Mozambique and Namibia, has bottled CocaCola products for the past 60 years. Sabco is the only African based anchor bottler in the global Coca-Cola system. Coca-Cola manufactures, markets and distributes nonalcoholic beverage concentrates and syrups used to produce more than 300 beverage brands with local operations in 200 countries. Sabco CEO Martin Jansen said 2 March that Vietnam, Sri Lanka and Nepal had relatively low Coca-Cola brand consumption, despite their 120-million-strong population. Jansen believed the bottler could manage and develop profitable operations "in challenging environments".

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FOREIGN ECONOMIC COOPERATION

South Africa, India, Brazil outline cooperation

Foreign Affairs Ministers of India, Brazil and South Africa have agreed to establish ambitious South-South economic ties by cooperating in areas of industry, services and business to create a market of 1.2 billion people with foreign trade of 300 billion US Dollars. Plans are well under way to build a new world economic power bloc that would unite Africa, Asia and Latin America through free-trade agreements, says Foreign Minister Nkosazana Dlamini-Zuma. The move will help give developing nations a stronger voice and more clout in negotiations with the developed world in forums such as the World Trade Organisation. "We have a lot in common and it will also give us more clout when dealing in north-south negotiations," said Dlamini-Zuma during a briefing on a recent visit to India. The proposed power bloc, comprising South Africa, Brazil and India, will also signal a major advance in the country's strategy of growing trade relations among southern hemisphere nations. These countries have a strong partnership through the India, Brazil, South Africa Dialogue Forum. The three countries have repeatedly called for a review of all of the UN's influential structures, saying the Security Council, as configured today, "is not representative of present-day realities." Currently only the US, France, Britain, China and Russia have permanent seats and veto powers while developing nations share amongst themselves rotational non-permanent roles, with little or no power. India, Brazil and South Africa under the India, Brazil, SA Dialogue Forum (IBSA), aim to change the status quo, by gaining permanent seats, a move many believe, could increase the voices of developing nations on international issues. India, Brazil and South Africa have planned a number of collaborative projects in the areas of distance education, bio-energy, e-medicine and e-commerce. These will form part of a range of projects intended to promote deeper international co-operation. Foreign Minister Nkosazana Dlamini-Zuma, her Brazilian counterpart Celso Luiz Nunez Amorim and their Indian host Yashwant Sinha concluded two days of talks in New Delhi 5 March. The forum was formally launched by the presidents of the three countries in September 2003 at the opening of last year's United Nations (UN) General Assembly session. Officials involved in the talks say they would prefer the grouping, which allies the three largest democracies in the developing world, to now be known as IBSA rather than the Group of Three (G-3). They say that the G-3 designation confuses the forum with the partnership between Germany, the UK and France. They aim to promote reforms to the world trade system, the World Bank, the International Monetary Fund and the UN Security Council. The three governments are also intent on promoting stronger trade links between each other's economies. They are likely to encourage an increase in the number of air flights and shipping routes connecting the three countries. In the long term, South Africa stands to gain considerable strategic and economic advantage from cultivating strong links with the far more populous Brazil and India, as both countries are expected to be among the world's largest six economies within the next 10-15 years.

Indonesia cooperation

Foreign Affairs Minister Dlamini Zuma and her Indonesian counterpart, Dr Noer Hassan Wirajuda, signed Bilateral Agreement, paving way for increased trade, political and cultural links between the two countries 23 March. Among others the two discussed the forthcoming South African general elections, the operation of the African Union and the implementation of Nepad, South Africa's position on recent developments in Iraq, the Middle East, Haiti and Zimbabwe and the recent ministerial meeting of the India-Brazil-South Africa (IBSA) trilateral forum in New Delhi, India. The co-operation agreement paves way for increasing investment by South African companies in the vast mineral reserves of Indonesia. One of the biggest information technology companies in South Africa, M-Web, has a huge investment portfolio to the tune of USD16 billion in Indonesia. So far agreements signed between the two countries include the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, air services and trade agreements.

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MEDICAL NEWS

Drug Firms Threaten to Quit South Africa

The pharmaceutical industry has become openly hostile to government's plan to slash the cost of medicines, with key players warning that the plan is unworkable and a threat to the R20bn industry. Health Minister Manto Tshabalala-Msimang has promised that the regulations, which control the factory exit price of medicines and the permitted mark-ups at every stage of the distribution chain, will slash medicine costs up to 70%. But a cross section of healthcare industry leaders voiced deep concern 23 March at separate forums organised by risk management company MX Health and the Free Market Foundation. "If these regulations go through in their current form, we can't continue to invest in South Africa," warned Paul Stewart, CEO of Boehringer Ingelheim, which holds the patent on key AIDS drug nevirapine. Although industry sources have privately been saying for some time that several multinational pharmaceutical companies are contemplating withdrawing from South Africa, this is the first time one has said so publicly. Multinational pharmaceutical companies employ 9,000 people and contribute R12bn a year to the economy, according to the Pharmaceutical Manufacturers Association (PMA). Pharmaceutical companies are unhappy with government's plans for a blanket 50% cut in the ex-factory price of medicines. Contrary to government's view, multinational companies selling branded products did not discount heavily off the industry's "blue book" of medicine prices, said PMA chief operating officer Vicki Ehrich.

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MINERALS & METALS

BHP Billiton 9bn Iron Ore Deal With China

BHP Billiton has entered into a $9bn joint venture with four Chinese steel mills over 25 years as companies in the fast-growing Chinese economy move to secure supplies of raw materials needed to underpin the country's industrial growth. The world's biggest mining company entered into joint ventures with China's Wuhan Iron and Steel, Maanshan Iron and Steel, Jiangsu Shagang and Tangshan Iron and Steel to supply 12-million tons of iron ore a year for 25 years. China is the world's fastest-growing major economy, and in the final quarter of last year gross domestic product grew 9.9%. The demand for iron ore from China is expected to rise more than 20% this year. BHP Billiton will immediately begin shipping an additional 4-million to 6-million tons a year of iron ore, which is used in the steel-making process, to the steel producers, which are part of the Wheelarra joint venture. Last month, Chip Goodyear, CEO of BHP Billiton, said sales to China made up 10% of the company's total sales in the six months compared with 5% a year ago.

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PETROCHEMICALS

Sasol Plans $6bn Qatar Expansion

Petrochemicals and fuel group Sasol is planning a major $6bn expansion of its operations in Qatar. This will make the Arab state the most important site in the company's growing international portfolio of gas-to-liquid fuel projects. Sasol executive director Pat Davies said 24 March, in a telephone interview, from Qatar that the growth there would be three-pronged. Production at Sasol's existing 34,000 barrels-a day Oryx gas-to-liquid project, a joint venture with Qatar Petroleum, is to be expanded to 100,000 barrels a day. The expansion would bring Sasol's global gasto-liquids partner, ChevronTexaco of the US, into the picture in Qatar, as the original Oryx project predated Sasol's tie up with Chevron Texaco. "We have said for some time that we want to expand this project, and we have now signed a memorandum of understanding to evaluate the expansion," Davies said. He said that the expanded Oryx project would be about two thirds the size of Sasol's Sasolburg plant in terms of fuel output, and would cost about 1.5bn. The second leg of the Qatar expansion blueprint would involve a 4.5bn integrated gas-to liquid fuel operation. This would comprise the drilling of wells, extracting and cleaning the gas, and then converting the gas into liquid fuel in a new plant with a capacity of 130,000 barrels a day.

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TELECOMMUNICATIONS

Anniversary Of Listing

Telkom, which listed at the bottom of the technology cycle, has enjoyed huge growth (of more than 160%) in both its share price and its earnings since listing on the Johannesburg and New York stock exchanges a year. As the company celebrated its first anniversary as a listed company 4 March, thousands of small black investors had made tens of millions of rand from their investment, giving a fillip to government's bid to bring black investors into the stock market and to give a boost to empowerment. Despite a certain amount of pessimism at the time of the listing on the JSE Securities Exchange SA and the New York Stock Exchange, shareholders in the fixed-line phone operator have ample reason to smile the value of their investment has soared over 160%. Having listed amid much scepticism and union resistance, the telecommunications giant has confounded most of its critics by performing beyond expectations and thus bolstering the ranks of South Africa's middle class. Telkom admits it could lose up to 15% of its market to a competing second national operator (SNO), but in the meantime it has taken advantage of delays in licensing the competitor. Telkom executives said at a telecoms analysts' day 24 March that while the SNO licence was expected to be granted this year, there was lack of clarity on when exactly this might happen. Telkom also issued a trading statement yesterday saying that earnings and headline earnings for the year to 31 March will be at least 30% higher than those of the previous year.

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TOURISM

South Africa Beats Global Slump

The South African tourism industry continued to grow in 2003, despite a global downturn that wrecked a number of world markets. Last year's figures, which show positive growth, were released by the World Tourism Organisation (WTO) at the start of an international tourism conference held in Berlin mid March. The conference attracted more than 9,000 exhibitors from 180 countries, and visitors were estimated to number above 140,000. According to the WTO, South Africa was one of the few destinations with positive growth in 2003. While average growth for other destinations stood at -2%, South Africa recorded a 1.2% increase. The decline in the global tourism market was largely due to the war on Iraq, general world recession, the impact of the Sars outbreak, and the terrorism threat. Moeketsi Mosola, chief operating officer of the South African Tourism Board (SATB), welcomed these figures and said the country had showed buoyancy in a difficult market.

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TRANSPORT

Spoornet to Raise R42.5bn

Rail Utility Spoornet said it was reviewing various options available to it to find the estimated R42.5bn it needs to fund its capital expenditure programme. This followed a recent announcement by the rail utility's CE, Dolly Mokgatle, that the company would go to the market to raise a significant chunk of the funding. The money will be used to buy new locomotives and wagons, as well as to refurbish South Africa's rail lines after decades of under investment. Spoornet said it would also seek public-private partnerships to help raise the funding. The state-owned company's executive manager for corporate communications, Bintu Petsana, said: "Spoornet is reviewing various options regarding borrowings. "These will then be presented to parent company Transnet, which will weigh up the options in terms of its broader strategy and the best mix will then be presented to government for final approval." Spoornet said the R15bn fleet refurbishment tender was "in the process of being adjudicated" and the names of short-listed bidders would be announced soon. Spoornet declined to say who the bidders were or how many companies had submitted applications. The tender, which is the largest freight railway contract to be issued in Africa, is understood to have attracted several international rolling stock manufacturers. These include Siemens, Alstom and Bombadier. Major South African exporters have all recently criticised the company's poor service. Toyota has threatened to transport its vehicles between Durban and Gauteng by road.

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UNEMPLOYMENT

Unemployment rate declines

According to Statistics SA (Stats SA) unemployment fell significantly in the six months to September last year, after rising steadily since the 1990s South Africa's official unemployment rate has declined to 28.2 percent in September 2003 from 31.2 percent in March 2003, Statistics South Africa reported 25 March. This means that the number of unemployed people fell from 5.3 million in March 2003 to 4.6 million in September 2003, a decline of 680 000 people. However, the decline was accompanied by an increase in the not economically active population over the same period from 12.7 million to 13.7 million. Stats SA said that although the official unemployment rate declined to 28.2 percent, the 'unofficial' or expanded unemployment rate remained virtually unchanged over the same period at 42.1 percent in March 2003 and 41.8 percent in September the same year. The official unemployment rate fell markedly in the six months to September, even though there was no increase in the number of people with jobs. This is because almost a million job seekers became so discouraged that they stopped looking for work and were no longer counted in the ranks of the unemployed. Unemployment is already a pillar of many parties' election campaigns, and the Democratic Alliance (DA) wasted little time yesterday in claiming that the latest figures "misrepresent the unemployment crisis". With the number of economically inactive people in the economy rising, this explains why the expanded definition of unemployment which includes discouraged workers remained relatively stable at 41,8% in September, despite a decline in the official unemployment rate. The economically inactive category usually includes individuals such as school and university students, housewives, pensioners and the disabled.

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