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Books on South Africa
REPUBLICAN REFERENCE
Area (sq.km)
1,219,912
Population
43,586,097
Capital
Pretoria
Currency
rand
President
Thabo Mbeki
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Update No: 041 - (31/05/05)
South Africa's National Intelligence Agency (NIA) is
investigating a wave of housing riots. Sporadic unrest in isolated rural
townships in recent months escalated in the past fortnight with riots around
Port Elizabeth and Cape Town which saw police fire rubber bullets and tear gas
at rock-throwing protesters manning burning barricades in scenes reminiscent of
the darkest days of apartheid repression. NIA spokeswoman Lorna Daniels
confirmed May 29 that the agency was investigating the causes of the upsurge in
violence, an unusual move which analysts said shows that the authorities take
the disturbances seriously. The recent wave of township riots over a lack of
housing and basic services is sparking concern that the growing unrest could
destabilise the continent's youngest democracy.
A new report states that African economies grew more than 5% in 2004, their
highest growth in eight years, spurred by high commodity prices. The African
Economic Outlook, produced by the OECD and the African Development Bank, praised
"steadily prudent economic policies". But it pointed out that Africa
was still vulnerable to regional conflicts. And it called for more debt relief,
action against corruption and support for small businesses. The report
highlighted the humanitarian crisis in the Darfur region in Sudan, economic
collapse in Zimbabwe and conflicts in Ivory Coast and parts of the Democratic
Republic of Congo as factors constraining growth. The report was launched in
Abuja, Nigeria, at the African Development Bank meeting on 17 May.
Barclays is to pay 33bn rand (£2.9bn; $5.5bn) for Absa, South Africa's biggest
retail lender. South African Finance Minister Trevor Manuel has given the
go-ahead for the move by the UK's third largest bank. The deal marks the biggest
single foreign investment in South Africa, and makes Barclays Africa's largest
bank. "This may well open the floodgates of investment in South
Africa," said Colin Coleman, Goldman Sachs' managing director in South
Africa. "It would be our hope that other global multinationals view the
country in the same light as Barclays - a high growth, emerging market
opportunity." Several hundred people demonstrated in central Johannesburg
May 28 against Barclays plans to return to retail banking in South Africa.
Barclays was forced to leave the country in 1986 under pressure from
anti-apartheid activists, but re-established a small investment banking presence
10 years ago. The demonstration was organised by Jubilee South Africa a group,
which has taken legal action in the US against a number of major multinationals
which operated under apartheid despite international embargoes. President Thabo
Mbeki countered that investments by both Barclays and General Motors constituted
"an inspiring and unequivocal vote of confidence" in the democratic
South Africa.
In a wide-ranging critique of British Prime Minister Tony Blair's Commission for
Africa report, Democratic Alliance leader Tony Leon says there is a risk of
reforms on the continent slowing down if countries "are showered with new
flows of aid before they have fixed problems with corruption and
mismanagement". Leon's comments, which were submitted to Blair Mid-May,
were based on a speech he delivered in Sofia, Bulgaria. "Doubling aid, for
all the noble aims of such a step, would be useless unless the capacity of
African countries to spend that aid effectively was doubled first. Some are able
to handle new aid, but others are not," Leon said.
UN agencies condemned vitamin proponent Matthias Rath for his attack on
life-prolonging anti-AIDS drugs May 11. Just days before he faced a court
challenge in South Africa. The Advertising Standards Authority (ASA) has ruled
against two adverts placed by him in the national press. The ruling came as the
Treatment Action Campaign (TAC) took him to court to stop him alleging that TAC
is a front for the pharmaceutical industry. Rath has run a year long campaign in
South Africa against antiretroviral medicines, used to slow the progression of
HIV, saying they are poisonous and that his vitamin products can do a better
job. The highly charged case has prompted Médecins Sans Frontières to call on
the health department to unequivocally state that nutrition alone would not save
people with HIV from death. In a joint statement the World Health Organisation,
the UN Children's Fund and UNAIDS described Rath's claims as "misleading
and potentially dangerous". "Misrepresentations of this sort are both
dangerous and unhelpful. In countries where it is widely available,
antiretroviral therapy has turned HIV/AIDS from a 'death sentence' into a
chronic but manageable disease," the UN agencies said. UNAIDS executive
director Peter Piot told a press conference in Johannesburg, South Africa, May
25.
New research states that almost one in three deaths in South Africa are caused
by Aids making it the leading killer. In two provinces, the figure is as high as
40%, says an unreleased report by South Africa's Medical Research Council.
Research was based on the study of death statistics for the year 2000. A
researcher admitted that the report relied partly on estimations, since
Aids-related deaths are not always identified on death certificates. The high
death rates due to HIV/Aids highlight the urgency to accelerate the
implementation of the comprehensive plan for the treatment and prevention of HIV
and Aids. The MRC report is the first to include a provincial breakdown of
Aids-related deaths. In KwaZulu-Natal province, 41.5 % of deaths are
attributable to Aids, followed by Mpumalanga with 40.7 percent, the report says.
The health department has declined to comment on the report, arguing that the
document has not yet been "officially" released. The findings in the
report, which is already available to news agencies on request, showed that
almost 30 percent of deaths in 2000 were caused by HIV/AIDS.
South Africa's reputation as a mining investment destination has "suffered
a lot of damage" because of Harmony's hostile bid for Gold Fields,
Mvelaphanda Resources CE Pine Pienaar said May 17. He said this was the message
he had received on a recent overseas investment road show, and a big effort was
needed to restore the country's attractiveness among offshore investors.
Mvelaphanda owns 15% of Gold Fields' local assets, and has the future right to
convert this to a smaller percentage holding in the listed gold company.
"All the investors we spoke to in the US, Britain and Europe were very
concerned about South Africa as an investment destination, in the mining
sector," said Pienaar.
A South African court has barred the Mail & Guardian newspaper from
publishing a story involving an oil management company. The investigative weekly
frequently faced legal action from the state under apartheid, but has operated
freely since 1994. The paper had reported that the ruling ANC had received
taxpayer funds from the oil company Imvume and it was intending to run a
follow-up story at the end of May. Asked for comment by the paper, Imvume's
lawyers responded that the company's business activities and support for the ANC
were a private affair, while ANC lawyers said their clients were not obliged to
discuss donations received. "We've been gagged," Mail editor Ferial
Hafajee said. "Our biggest concern is press freedom, but we will respect
the court's hearing," she added.
African Ministers of Health attending the 58th World Health Assembly (WHA) in
Geneva, Switzerland spoke with one voice regarding the continued migration of
health professionals to developed countries. The WHA is the supreme
decision-making body of the World Health Organisation (WHO) that meets annually
to determine the organisation's bodies. The Ministers are concerned that
international migration and recruitment of personnel undermines the main
investment that most African countries have made in improving their health
services and further weakens the health systems in the continent. Other
interventions involved improving working conditions for health workers and
providing scarce skills and rural allowances to attract and retain health
workers in the public health sector in general and rural or under served areas
in particular.
G8Summit - UK Business Buy-in for Aid Plan
The British government is intensively lobbying big business with interests
in Africa to back the recommendations of Prime Minister Tony Blair's Commission
for Africa report ahead of the Group of Eight (G-8) summit in July. Senior UK
public servants are enlisting business to ensure the G-8 summit fully supports
the commission's proposals. Among the commission's recommendations are a
doubling of aid to Africa, extensive debt relief and opening up of developed
countries' markets. A largely British business group, Business Action for
Africa, is trying to bring large corporations together to draw up an action plan
ahead of the summit, in order to influence G-8 governments. Its founder members
are UK-listed companies including Anglo American, SABMiller, Rio Tinto and
Unilever. The action group wants business to become "a locomotive for
change" in Africa. It hopes business can begin to play a more significant
role in African development through a commitment to greater social
responsibility and strict adherence to codes of conduct. Members are also being
called upon to spread good news about investments in Africa. A buy-in from
business is also needed to put into action the commission's recommendations for
extractive industries, which require greater transparency about the payments
made by oil companies to governments as well as help from banks in the
repatriation of stolen funds. As part of their lobbying British officials will
attend the World Economic Forum's annual southern African summit in Cape Town
from June 1-3, and a meeting of the US Corporate Council on Africa from June
21-23.
Support for Africa Aid Plan Tops Mbeki's Agenda for Bush Meeting
President Thabo Mbeki meets President George Bush in Washington June 1st to
lobby his support for an ambitious plan for increased aid for Africa to be
discussed at the Group of Eight summit in July. White House spokesman Scott
McClellan said Bush looked forward "to discussing their common concern for
global security, conflict resolution in Africa, economic development, trade and
investment, and fighting HIV/Aids in Africa". Mbeki's spokesman, Bheki
Khumalo, confirmed the visit. But he and other South African officials stressed
that Mbeki's main concern would be to discuss the G8 summit in Gleneagles,
Scotland, to be hosted by UK Prime Minister Tony Blair. Blair has promised to
make Africa one of the key concerns of the summit, the other being climate
change. So a major focus of the summit should be the Commission for Africa which
Blair appointed and which recently published ambitious recommendations for
increased aid from the G8 countries to Africa. These included a doubling and
later possibly tripling of development finance, large debt relief and
substantially increased access for African exports to G8 markets. These
recommendations would implement much of the G8 Africa Action Plan the G8 leaders
adopted at their 2002 summit in Kannanaskis, Canada, but which has only partly
been implemented. Serious differences have emerged among the G8 countries over
the Blair Commission's recommendations, especially its proposed international
financing facility. The US has made it clear it cannot support this facility and
is lukewarm about other recommendations of the commission. Japan, Germany and
Italy are also opposed to much of the plan. Mbeki himself has said he is
concerned that the G8 governments should overcome their disagreements before the
Gleneagles summit so it did not become a debating forum but a meeting to agree
on practical steps to implement the G8 Africa Action Plan and the
recommendations of the Africa commission. On trade, Mbeki and Bush are likely to
discuss the stalled negotiations for a free trade area between the US and the
Southern African Customs Union, of which South Africa is the major member. The
talks have broken down over, among other things, US demands for labour and
environmental standards to be met in producing goods for export into the US
market.
Amnesty Criticises SA Over Slow Roll-Out of Aids Drugs
Amnesty International criticised government in its annual report, released
May 25, for the slow roll-out of antiretrovirals. By August last year, when the
London-based human rights group visited SA, only about half of government's
target of 53000 people had access to antiretroviral drugs through
state-accredited facilities. This was short of the figure of about 500,000
people that the Actuarial Society says require treatment with antiretroviral
drugs. The initial target date was March last year, but government moved it out
by a year. It said recently that only 42,000 people were receiving
antiretrovirals. Amnesty also said President Thabo Mbeki "publicly
minimised the concerns of service-providing and advocacy organisations about the
high levels of rape and the link with the epidemic of HIV infection among
younger women". According to the AIDS Law Project, connected to the
University of the Witwatersrand, 50000-60000 people are receiving
antiretrovirals at private health-care facilities. The Actuarial Society says
about 5-million South Africans are infected with HIV, and 10% of them require
treatment with the drugs. SA was also criticised in the report for poor access
to justice and health care for rape survivors and for deaths in police custody.
Child and adult rape survivors interviewed by Amnesty said they experienced
"considerable" difficulty getting further medical treatment or
psychological care, the rights group said. This was due to a combination of
social stigma, unemployment, and lack of secure housing. Amnesty did give SA
credit for improvements in the justice system for rape survivors, including
policies on family violence, child protection and sexual-offences units. The
rights group also said "credible allegations of torture or
ill-treatment" were made by criminal suspects, refugees, and political
activists. And it said corrupt practices by immigration officials obstructed
access to justice by asylum seekers.
Cosatu - Jobs Strike in June
The Congress of South African Trade Unions (Cosatu) plans to go on a
nation-wide strike on June 27 to protest against the "catastrophic loss of
jobs and intolerably high levels of unemployment in the country", Cosatu
secretary general Zwelinzima Vavi said on May 26. More than 10 000 jobs have
been lost since January, and 30 000 more are under threat as companies continue
to shed jobs, partly as a result of the strong rand. The unemployment rate in
the country stands at 40% "if we count all those who want paid work".
Vavi said the National Economic Development and Labour Council (Nedlac) had
declared a deadlock in negotiations between employers and unions. "In the
next few days, Cosatu will submit notices that permit workers to embark on
protected rolling mass action, including pickets, demonstrations and a series of
stayaways. The first stay away will be on June 27," he said. The June
strike will be followed by monthly protests until January 2006. These will
include pickets and lunch-hour demonstrations. In December action will peak,
with a mass rally planned to coincide with Cosatu's 20th anniversary. Vavi took
a swipe at the ANC discussion document, which proposes amendments to labour
laws. "We reject suggestions that there is a link between the labour market
and unemployment. The document suggests a dual economy requires dual labour
laws. But separate labour laws for different groups will just entrench exclusion
and inequality. "Cosatu will not let workers be pushed back into conditions
where their rights depend on where they are from, their age or the size of their
employer," he said.
Protests Against Slow Social Improvements
Without a massive injection of ideas and energy, the ANC has no chance of
meeting its election promise to halve poverty and unemployment by 2015. They are
global afflictions, structurally entrenched by apartheid, which bolster the
social segregation that still blights South Africa. Street protests across the
country underline the growing impatience of the masses, who have still to
benefit tangibly from the 1994 transition to democracy. By the most conservative
estimate, 10 million South Africans are still so poor that they depend on
government hand-outs just to survive. At least 4.5 million people are actively
looking for work. More than a decade after winning power the ANC faces
increasing pressure to deliver promised social services. During May angry
protestors blocked roads, set up burning barricades, sung liberation struggle
songs and demanded that local authorities in the coastal cities of Cape Town in
Western Cape province, and Port Elizabeth in Eastern Cape province address their
needs. These developments have caught the attention of President Thabo Mbeki. He
told parliament May 25 that "nothing that is happening, or has happened in
our country, suggests that our new democracy is threatened". But he pointed
to "fault lines" in South African society "that can emerge and
generate conflicts that we do not need". One problem area underlined by the
demonstrations was the feeling "among some of the poor that, so far, the
democratic order has failed them". The recent protests "reflect and
seek to exploit the class and nationality fault lines we inherited from our
past, which, if ever they took root, gaining genuine popular support, would pose
a threat to the stability of democratic South Africa", Mbeki told
parliament. Ashwin Desai, a researcher at the Centre for Civil Society at the
University of KwaZulu-Natal, said the demonstrations were "a genuine cry
about the neglect, which is very apparent, and the distance between government
and ordinary people". "The sheer scale and geographic spread [of the
discontent] has forced Mbeki to recognise these things as more than a conspiracy
[by particular groups] ... they are genuine protests against expectations that
the government themselves have created: of free basic services, homes and jobs
for all." After the first democratic elections in 1994, people gave
government the benefit of the doubt, just on sentiment and because a non-ANC
regime is not one people find palatable, but they're asking why things are
taking so long.
Southern Africa: UN Leaders Call for Action
Three United Nations leaders issued a call in Johannesburg May 25 for the
world to refocus its attention on Southern Africa, as the region faces the
triple threat of HIV/AIDS, food insecurity and weakened state capacity. UN
Special Envoy James Morris, UN Children's Fund (UNICEF) executive director Ann
Veneman, and UNAIDS executive director Peter Piot warned in a joint statement
that despite great strides made by governments and the international community
in meeting the most critical needs of the region, the 'triple threat' still
stalked Southern Africa, and more investment was needed if the gains of the last
three years were to be sustained. "Emergencies come and go, but we are now
in an acute phase of a chronic problem, and the effects of this are going to be
with us for generations to come," Morris said. "This is not about one
issue or one country - many factors are converging to undermine the livelihoods
of millions of people in Southern Africa. The complexity of the situation
demands that we must do all we can to help governments in the region." Due
to the current dry spell and crop failure an estimated seven million people
could need food assistance over the coming year. Although, final analysis of
regional crop assessments is expected in early June. The UN leaders noted that
three years ago, at the height of the Southern African crisis, many countries in
the region were without food security, access to treatment for people living
with HIV/AIDS, or programmes to target the growing number of orphans and other
vulnerable people. As a result of concerted efforts by governments, civil
society, the UN system and the international community, there was now greater
diversification of crops and sources of income, which was helping to mitigate
the impact of erratic weather; several countries had developed action plans to
create safety nets for the more than four million orphans and other vulnerable
children; and up to 176,000 people now received antiretroviral (ARV) treatment.
However, one million people were still not receiving ARVs. Morris met with 10 UN
country representatives from Southern Africa on Wednesday morning to review and
examine current interventions, joint programming, UN reform, and strategies for
addressing the multiple impacts of the triple threat. The three leaders
emphasised the complexity of the triple threat. "Without food,
antiretrovirals are less effective; without antiretrovirals, children become
orphans; and without a healthy and educated next generation, Southern Africa
will have great difficulty breaking the cycle of poverty," they stressed.
"Over twenty years into the epidemic, we know that an exceptional response
is required," said Piot. "We need to make sure that HIV prevention,
food security and HIV treatment are integrated into a comprehensive response:
this is the only way to get ahead of the epidemic. We must aim for universal
access to HIV prevention and treatment."
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AVIATION
Delayed Aviation Treaty to Come Into Effect
The Yamoussoukro Decision, which seeks to liberalise African aviation, is to be
implemented in phases by the end of next year. The four-day African Union (AU)
air transport conference, which was held at Sun City Mid-May has set definitive
time-frames for implementation of the treaty, sending a strong message of its
seriousness on the opening of the African skies for competition. The
Yamoussoukro Decision was initially planned to be fully implemented in 2002, but
was hampered by social instability and lack of political will in some countries.
The draft resolution for the implementation of the accord was adopted yesterday,
and it committed governments to the full implementation of the treaty by the end
of next year. In the interim, the AU has commissioned a study to establish the
challenges faced by governments in implementing the accord. A monitoring body
was also appointed to harmonise national and regional air transport policies.
Guidelines on the criteria for evaluating compliance of the treaty would be
distributed to Africa's 53 states within the next three months. The guidelines
for the harmonisation of competition rules would be adopted within six months.
According to the report, African transport ministers were "extremely
concerned with the ordinate delay in the implementation of the Yamoussoukro
Decision". President Thabo Mbeki urged AU heads of state to
"accelerate efforts" to implement the accord May 18.
President Mbeki says Africa needs a comprehensive and concrete programme of
action for aviation, in line with Nepad and the Millennium Development Goals (MDGs).
He said the aviation industry was currently in a "parlous state of
affairs" and that airlines were often unreliable with frequent
cancellations, which were not only inconvenient but also unproductive for
Africa's economic growth. President Mbeki was speaking May 18 at the opening of
the African Union (AU) meeting of ministers in Sun City, North West, to find
ways of enhancing the continent's aviation and air traffic system.
Speaking of the aviation industry's potential to stimulate economic growth,
President Mbeki alluded to statistics by the International Air Traffic
Association (IATA) that revealed that airlines brought to the global economy
about four million direct jobs with US400 billion Dollars output and 24 million
related jobs or US 1.4 trillion Dollars.
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BANKING
Increase in Offer From Barclays
Barclays' acquisition of Absa appears to be a "done deal", with
minority shareholders welcoming a significantly changed structure and improved
R82,50 offer from the UK bank may 9. If shareholders vote in favour of the deal
at a scheme of arrangement meeting on June 13, Absa will be owned by the UK bank
by July 13. Shareholders representing 63% of Absa's shares have already given
their support to the deal. Barclays' proposed R33bn investment in Absa, which
would be SA's largest foreign direct investment, could signal the beginning of
more major investments in SA, Absa chairman Danie Cronje said. "It leaves
us with the impression that this is a beacon for foreign confidence in
investment," Cronje said. "This is an investment I think SA should be
proud of." Barclays' new-look deal for a majority stake in Absa includes a
4,4% increase to the R79 offer that was indicated previously, as well as a new
structure, which will be conducted in two phases. The first requires
shareholders to sell 32% of their shares if the scheme of arrangement meeting
votes in its favour on June 13. The second phase, a voluntary offer, will ask
shareholders to sell a further 28% or more of their shares to give Barclays the
60% stake it is looking for. Because Sanlam and Remgro, the bank's two largest
shareholders with a combined 28%, have already agreed to sell all their shares,
other minority shareholders can tender less for Barclays still to reach the 60%
it wants in Absa. Cronje said a final dividend of R2 a share would also be paid
to shareholders. Absa's board and management have already given their
recommendation for the offer. It also has the support of Absa's empowerment
partner Batho Bonke. "We feel the price is right and the dividend is
appropriate with the circumstances Absa finds itself in," Cronje said.
"The scheme of arrangement will go to shareholders. We need 75% of
shareholders to approve that at the meeting and we feel the support that we have
for this transaction will make it successful." If the deal goes ahead,
Cronje said Absa's board would be largely unchanged, apart from the addition of
Dominic Bruynseels, CEO for Barclays Middle East and Africa, as an executive
director. And two new Barclays non-executive directors, including David Roberts,
Barclays' retail and commercial banking CEO, and Barclays finance director
Naguib Kheraj. They will replace Sanlam and Remgro's representatives on the Absa
board. Barclays expects to grow Africa's contribution to its annual revenue from
a "modest" 3% to 15% by 2007, if its bid for Absa is successful.
Speaking on May 6 at the launch of a report entitled Delivering Financial
Services to Africa, Barclays MD for sub-Saharan Africa and the Indian Ocean
Malcolm Hewitt said a successful outcome to the bid would also grow the number
of African countries in which Barclays operates from 12 to about 15.
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EXPORT
AGOA Increases Exports
Exports from the 37 African countries eligible for duty-free exports to the US
under that country's African Growth and Opportunity Act (Agoa) jumped 88% to
$26,6bn last year over 2003, says the latest Agoa annual report, submitted to
the US congress by US President George Bush May 23. US exports to sub-Saharan
Africa rose a quarter to $8,6bn, according to the report released by the US
Bureau of International Information Programmes. The figures support the widely
held view in the US and Africa that the five-year old Agoa initiative has been
successful in stimulating trade between the two regions. The initiative has
already been extended, and a study is under way into expanding it to include a
wider range of countries and products. The study will be completed in July. The
bulk of the increase in sub-Saharan exports came from oil, although non-oil
exports also rose a solid 22% to $3,5bn. Oil-producing nations recorded the
largest increases. Nigeria's exports under Agoa grew 56%, Gabon's 25% and
exports from Republic of Congo almost doubled. A 29% rise in South African
exports under the act also came mainly from commodities, such as platinum,
diamonds and ferroalloys. The report says exports of vehicles and parts from SA
to the US continued to increase. More than 98% of US imports from Agoa-beneficiary
countries entered duty-free, says the report. The benefits that exporters in SA
and its customs union partners enjoy under Agoa at the moment are expected to be
locked in and expanded on under a free trade agreement that both regions had
hoped to seal in December last year. Talks stalled around the middle of last
year, however, and have not yet been resuscitated. The US report yesterday
blamed "capacity constraints" in the Southern African Customs Union -
comprising SA, Botswana, Lesotho, Namibia, and Swaziland - as well as divergent
views for the slower-than-expected progress. Negotiations are expected to resume
"later in 2005". The Agoa report says foreign direct investment from
the US into sub-Saharan Africa was estimated to have increased to $10,6bn in
2003 from $8,9bn in 2002.
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FOREIGN ECONOMIC RELATIONS
SA, Bulgaria to Improve Economic Relations
Deputy Foreign Affairs Minister Aziz Pahad held bilateral political and economic
discussions with his Bulgarian counterpart Petko Draganov May 25.
Foreign Affairs said the two discussed the status of bilateral political and
economic relations as part of efforts to maintain and improve those ties. Deputy
Minister Dragonov also briefed Mr Pahad on Bulgarian foreign policy priorities
with particular reference to NATO, the European Union and global reform of
governance including the United Nations. Mr Pahad briefed his Bulgarian
counterpart on South African foreign policy priorities, engagement within the
African Union (AU) and conflict resolution and prevention in Africa.
Developments in the Middle East with particular reference to the conference on
the region Mr Pahad attended last week also featured in the discussions. Last
year South Africa's exports to Bulgaria amounted to more than US 4 million
Dollars and in return imported goods worth more than US 6 million Dollars from
Bulgaria.
Sudan and DRC Congo to Receive Public Services Support
South Africa will despatch separate teams of experts to Sudan and the Democratic
Republic of Congo (DRC) to help the two rebuild their nearly non-existent public
sectors. The two countries are struggling to emerge from decades of devastating
internal conflicts that saw among others, the collapse of public infrastructure
and services. Public Service and Administration Minister Geraldine Fraser-Moleketi
told Parliament today that officials would provide "technical and limited
financial support" to various public service institutions in the DRC over a
three-year period. This, she said, would include auditing the number of public
servants on government payroll to help with salary administration, human
resource planning and management. They will also help with anti-corruption
initiatives, and the setting up of a national public administration training
institute. "These are necessary pre-conditions to building an effective
service delivery machinery," Ms Fraser-Moleketi said. The move to reform
the Congolese public sector, argued the minister, was to "set that country
on the way to realising its full potential". She also announced that senior
officials from the South African Management and Development Institute (SAMDI)
and her department would visit Sudan next month to help capacitate the public
sector especially in skills development. Meanwhile, the minister also revealed
that South Africa's preparations for the AU peer review were "advancing
well". "By the end of July we will have started engagements with all
the affected sectors. Our national process will lead to the preparation of a
self-assessment report and the formulation of a programme of action before the
end of 2005," she said. Once this had been done, Parliament will be invited
consider the country report before it is submitted to the African Union (AU).
SA, Nigeria Join Forces to Secure Seats At UN Security Council
South Africa and Nigeria will "work together" to secure the two
permanent seats for Africa in the reformed United Nations Security Council.
Deputy Foreign Affairs Minister Aziz Pahad made the announcement May 5 at the
preparatory meeting of the SA-Nigeria Bi-National Commission scheduled to take
place later this year. Mr Pahad said while there were six African countries
vying for the continent's two permanent seats on the council, "South Africa
and Nigeria have decided to work together to ensure we get the two seats in the
Security Council." Commentators have tipped South Africa and Nigeria as the
two strongest candidates for the seats, due to their involvement in peacekeeping
operations in the continent and because both countries have the biggest
economies. According to the criteria laid down by the panel on UN reforms, new
members of the council should have contributed "most to the UN financially,
militarily and diplomatically," particularly through contributions to the
UN's assessed budgets and participation in mandated peace operations. The other
candidates are Libya, Egypt, Senegal and Kenya. However, Mr Pahad said while the
six African countries sought candidacy for the seats, the whole issue
"should not divert us as Africans from dealing with poverty and
underdevelopment in the continent." Mr Pahad's statement comes after
President Thabo Mbeki's parliamentary comments last month, reiterating that
Africa's two seats should have veto powers, to enable the global body to fight
poverty and underdevelopment. Developing countries are arguing against the
current power balance within the UN, which they say has resulted in the UN
ignoring global poverty, genocide, human rights abuses and the underdevelopment
of developing nations.
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FOREIGN INVESTMENT
SA Hopeful for Investment Upgrade
Ratings agency Fitch said May 12 that SA's chances of getting a sovereign rating
upgrade within the next 18 months were looking good. Fitch senior director Paul
Rawkins praised SA's economy. "The budget came in much better than we
expected." Any rating upgrade was most likely "within the next
eighteen months". An upgrade from the current investment-grade rating of
BBB would make it cheaper for SA's government to borrow money. It also would
encourage foreign investment as foreign investors typically chose countries with
higher ratings. Last October Fitch placed SA's currency rating on a
"positive outlook", suggesting that the country's overall sovereign
rating could be upgraded soon. In January the largest ratings agency, Moodys
Investor Services, upgraded SA to a Baa1, equivalent to a BBB+ and only one
notch below the coveted A category. Standard & Poor's gave SA a BBB rating
in May 2003. Fitch has released a special report on what it would take to raise
the credit profile of sub-Saharan Africa. It said this region should take
advantage of the stronger international environment "to build on
macroeconomic stability, press ahead with reforms and improve the investment
climate". Fitch's A category included a number of developing countries,
including Chile, South Korea, Malaysia, Israel and Hungary - but not any African
countries. In Africa only Tunisia has the same BBB investment-grade rating as
SA. Most sub-Saharan countries have a B rating, although Fitch director Veronic
Kalema said many were making progress by improving their economies, stabilising
politically and reducing debt.
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INDUSTRY
Coega Stainless Steel Plant in Pipeline
A new plan is being drawn up to site a stainless steel plant at Coega in
Eastern Cape, with discussions under way to find an anchor investor for the $5bn
project. The plant would be a major boost to Coega, and could become an anchor
project for the port's planned industrial development zone, given continuing
uncertainty over the prospects for building a $2,2bn aluminium smelter there.
The steel project would involve twice the investment of the aluminium project,
and would bring significant new employment to Eastern Cape. If the stainless
steel plant goes ahead, one way of helping to fund it could be through a stock
exchange listing, according to sources close to the project. London-based
resources company Kermas, which recently purchased Samanchor chrome in a $469m
deal, is one of the prospective participants in the Coega stainless steel
project, as will be the Industrial Development Corporation and Bateman. There
will also be an empowerment shareholder in the consortium which, the sources
said, could start operating next year. Discussions are under way with three
global players in the stainless steel industry to recruit another international
investor, who would provide both expertise and finance.
Coega Gains Textile Plant
COEGA industrial development zone in Eastern Cape has secured its
first tenant in the form of a R200m niche textile plant, which is expected to
employ 1200 people in two to three years. Coega chairman Moss Ngoasheng hailed
the investment by Belgian company Sander International together with empowerment
company ICAN as a milestone May 18. He said 75 more potential projects,
including the mooted multibillion rand Alcan aluminium smelter, were in the
pipeline. The viability of Coega, which government is developing at a cost of
more than R7bn, has been questioned against the backdrop of the struggle to
secure investors and because the project was politically motivated, rather than
economically. Ngoasheng said "we are not building a white elephant".
He hoped the textile plant announcement was the first of a series of investments
to follow over the next 18 months. Small black empowerment company ICAN, led by
motivational speaker David Molapo, would fund the project and own 51% of it.
Established 15-year-old Belgian textiles company Sander would own the balance.
Sander, founded and led by former opera singer Alex Liessens, would provide the
intellectual property and technology for the project which will supply products
to SA, the US, Europe, Middle East and Australia. The announcement comes as the
South African textiles and clothing industry is collapsing under the onslaught
of cheap Chinese imports. Liessens said Sander produced high-end niche products,
mainly fire retardant fabrics for the hospitality and automotive industries,
among others. Orders for 250000m of fabric from the new plant had already been
secured, said Sander Liessens said Sander chose Coega as its first investment
destination outside of Belgium, partly because the zone was geographically well
placed for shipments, such as to the Middle East and the US.
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INFORMATION TECHNOLOGY
Major Initiative for IBM SA
IBM has given its South African subsidiary a massive vote of confidence, and a
substantial cash injection, by using it as a base to provide technical support
for its customers around the world. About 250 technicians have been recruited to
staff the newly opened contact centre and that will grow to 700 by year's end if
IBM can find or train up sufficient skills in the South African market.
Ultimately thousands of jobs may be created to offer technical support and to
run the back-office systems for dozens of corporate customers. However, while
the centre represents a major foreign direct investment by IBM, it has caused
some ructions locally and abroad. IBM SA GM Mark Harris admits to upsetting
several local rivals by luring away their technicians, particularly those
experienced in mainframe and Unix technologies. Other recruits previously worked
for IBM's customers. Internationally, the move is creating job loses at contact
centres in the UK and the Netherlands, as work previously handled there is being
transferred to SA. IBM said it would be cutting up to 13000 jobs, mainly in
Europe - and the South African venture is a contributing factor. The centre is
also likely to win some customer support deals handled in the US. IBM also had
to persuade its customers that having their support handled from SA did not pose
a business risk. Such sensitivities caused long delays before the US-parent
company made a decision to base the business in SA. IBM executives visited SA
more than two years ago to assess the standard and volume of technology skills,
the telecommunications infrastructure, local wages, labour laws, the education
standard and overall living conditions. In the end, SA was chosen against
competition from the more mature outsourcing location of India and the emerging
Chinese market.. The parent company has provided an undisclosed budget to
enhance the network infrastructure and install telephony exchanges and helpdesk
equipment. Wages will also be paid by the parent company as the staff are
serving global customers. "This is foreign investment on a huge
scale," Harris said.
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MANUFACTURING
Rand Hurts Exports, and Production
Manufacturing production grew at its slowest pace in 13 months in March, as
exports were stalled by the strength of the rand, figures released by Statistics
SA (Stats SA) May 12 show. This has fuelled speculation that the Reserve Bank
may lower rates again before the end of the year to support the sector. Analysts
said that the rand's performance would be a key factor in determining the
prospects for the sector. Manufacturing output rose 1,2% year on year in March
and 0,9% month on month. The sector contributes almost 17% of gross domestic
product and its growth is used to measure expansion in the economy. Output
declined in the first two months of the year, to 3,2% year on year in January,
and 3% in February, as the strong rand continued to restrict growth in the
production side of the economy. March was the fourth consecutive month of
decline. The rand has gained about 10% against the greenback since the beginning
of the year. Lower production was reported by six of the 10 manufacturing
divisions. "The cut in interest rates in April and continued reasonable
growth in personal disposable incomes suggest that consumer spending will remain
strong in the months ahead, although year on year growth will ease off the
higher base," Nedcor chief economist Dennis Dykes said May 12.
Steinhoff Makes £105m Bid for Chunk of UK's Homestyle
Furniture maker Steinhoff International is bidding for a stake in struggling UK
furniture retailer Homestyle, for a maximum cash consideration of £105m (about
R1,22bn). The move is an attempt to keep in step with the UK trend of retailers
making furniture for their own chains. Steinhoff CEO Markus Jooste said
Homestyle was one of Steinhoff's leading customers and being closely tied to a
manufacturer would put the group on an "equal footing" with its UK
competitors. Steinhoff already has a presence in the UK in its bed manufacturers
Reylon and Sprung Slumber. If UK authorities give their approval, the furniture
maker will soon have a holding in a retailer which generated a turnover of £588,7m,
incurred an operating loss of £32,1m and had a net debt of £85m for the year
to May 1 last year. New management was brought into Homestyle a year ago to turn
the group around. Jooste said the new management team was doing well and further
improvement would come from Steinhoff's involvement. Homestyle's turnaround can
be seen in the company's latest set of results, which saw its operating loss
from continuing operations reduced from £6,2m to £2,3m and a reduction in net
debt to £57,5m for the 26 weeks to end-October. While Steinhoff could take up
to 73% of the publicly listed Homestyle, it planned to hold only 45% of the
company, Jooste said. The move into the UK retail sector is the latest departure
from its core furniture-making operations following the take-over of leading
transport and logistics company Unitrans after it exercised its option to buy
construction group Murray & Roberts' 44% holding in Unitrans, last year.
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MINING
Court Ruling Halts Harmony Takeover Bid
The Gold Fields board gathered in Johannesburg May 23 to discuss the company's
future strategy now that it has been unshackled from Harmony's hostile bid. The
bid collapsed May 20 after the high court issued a ruling that was fiercely
critical of the Securities Regulation Panel (SRP) and said that the bid had
expired before Christmas. Analysts said a major focus of the meeting would have
been the 11,5% of Gold Fields shares that are held by Harmony, but which Gold
Fields would like to see in friendlier hands. "One option is for Gold
Fields to buy the shares themselves, as they are able to do - and they have the
cash," said an analyst. "However, one wonders how easy it would be for
Gold Fields CE Ian Cockerill to do business with Harmony's (CE) Bernard
Swanepoel? "Gold Fields would want a discount to the market value of the
shares, while Swanepoel will seek a premium, as gold shares have been bounding
upwards with the stronger rand (gold price)." An industry player said that
one way to sweeten the deal might involve Gold Fields selling Harmony its
Beatrix mine in Free State, which was previously owned by Harmony. "If I
was in Swanepoel's shoes, I would want something for doing a deal, and getting
Beatrix back may well be on his mind," he said. Swanepoel said May 23 that
he had received "no serious offers yet, but I have no serious intention to
dispose of the shares. In a falling rand environment, the shares are doing
well." If Gold Fields does not itself bid for the shares held by Harmony,
it is possible that Norilsk Nickel of Russia, which holds 20% of Gold Fields,
could do so. Norilsk intends to place its stake in Gold Fields into a new
vehicle, Polyus, which may be listed in North America, and this could also be
the future home for Harmony's 11,5% of Gold Fields. There is widespread
speculation that Gold Fields may un-bundle its offshore assets, and these could
in future be merged with Polyus, creating a major new international gold player.
Norilsk had a strained relationship with Gold Fields last year, having backed
Harmony's hostile bid, but it is believed that there is now a far friendlier
relationship between the two. This could be further developed if Norilsk were to
be offered seats on the Gold Fields board. "It is difficult to predict what
Norilsk will get up to, as there are uncertainties about the company's freedom
of manoeuvre because of concerns that the Russian regulatory authorities may not
approve a further offshore adventure for Norilsk, and may not have been happy
with the original purchase of 20% of Gold Fields last year," said the
analyst. "Of course, Norilsk could be a potential buyer for Swanepoel's
11,5% of Gold Fields." The SRP would not comment yesterday on Friday's high
court ruling that it had shown bias in favour of Harmony. Gold Fields has been
considering seeking damages from the panel, or from Harmony, and the ruling
could lead to mounting pressure for a revision of takeover rules in the country,
as these appear to prevent a hostile takeover attempt standing any chance of
success.
Minister Criticises Mining Companies
Minerals and Energy Minister Phumzile Mlambo-Ngcuka has accused mining houses of
hiding behind the strong rand while paying high executive perks and dividends.
Mining companies blame the strong rand for the woes the sector is in and have,
together with the unions, called for government intervention to weaken it. The
call has largely been successful, with the Reserve Bank saying its recent
decision to cut the repo rate was aimed at breathing life into some sectors of
the economy suffering from the rand. The African National Congress wants a more
aggressive buying of dollars and a quicker relaxation of exchange controls to
effect a "competitive" rand value. Mlambo-Ngcuka said May 19 that
while the rand was a factor in its troubles, the industry had failed to adjust
its business plans to a stronger currency. "The strength of the rand by
itself is not a make-or-break factor," she said. She announced the
establishment of a tripartite committee - government, the Chamber of Mines and
trade unions - that would examine ways of managing the crisis in the gold-mining
industry, which has shed more than 8000 jobs in the past 18 months alone.
"We will not only be looking at the rand - we will be looking at a range of
measures," she said. "SA's gold mines are deep, the infrastructure is
complicated, and the geology is quite different from that of countries we're
competing with. Working costs are high and there are commodity cycles. She said
sections of the Minerals and Petroleum Resources Development Act would be
tightened to ensure social and labour plans were implemented. But she assured
the industry that no more black economic empowerment demands would be placed on
it. The mining charter would be aligned with trade and industry department
empowerment codes. Meanwhile, Minerals and Energy Deputy Minister Lulu Xingwana
said she was "exasperated and disappointed" that De Beers had replaced
a "white male CEO (Gary Ralfe) with another (Gareth Penny)".
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PETRO-CHEMICALS
Oil Companies Unstuck On Currency
The rand's appreciation against the dollar took its toll on South African oil
companies in 2003, with aggregate operating profits dropping 41% to R3,6bn from
R6,1bn the previous year. The South African Petroleum Industries Association (Sapia)
said in its 2004 annual report, released May 23, that this was largely a result
of refining margins declining in rand terms as the currency appreciated against
the dollar. Local refiners' margins are determined in dollars and are linked to
global trends through the basic fuels pricing system. Although dollar margins
were higher in 2003 than the previous year, the stronger rand meant they were
lower in rand terms. Sapia, which represents BP, Caltex, Engen, PetroSA, Sasol,
Shell and Total, said aggregate refining profits were also squeezed by plant
shutdowns, while the decline in rand oil values during the year resulted in
significant stockholding losses. However, marketing profits were higher than the
previous year due to a 6,93% increase in the regulated marketing margin granted
by government. The industry's marketing margin at the end of 2003 was 37,3c/l,
up from 28,3c/l in 2002. The margin is estimated to have risen to 39,3c/l last
year. Yet Sapia said the industry's aggregate after-tax return on assets
deteriorated to 4,2% in 2003 from 8,4% the previous year, the lowest level it
has reached in the association's 10-year history. Adjusted on a replacement-cost
basis, 2003 profits represent a return on assets of 6,9% and a margin of 8,6c/l,
which the organisation pointed out was lower than the return on bank deposits.
In his report Sapia chairman Simphiwe Mehlomakulu said it was "particularly
heartening" that many other local industries had followed the
organisation's lead in signing industry empowerment charters. "The
implementation of the charter includes much more than ownership," he said.
"Procurement, employment equity, capacity building and the creation of a
supportive culture are also vitally important. "All Sapia members are
trying to achieve the objectives of (the charter). Only four years into the
10-year period, significant progress has been made regarding the ownership
objectives, and the emphasis last year was therefore on the latter two
areas." Black control of the petroleum products market, including black
empowerment stakes in Sapia members and the market shares of black-owned
companies Afric Oil and Tepco, was 22,2% in the case of petrol and 23,7% for
diesel last year. And the percentage of goods and services bought by petroleum
companies from black suppliers rose to 17% in 2003 from 10,6% the previous year.
However, the proportion of blacks in senior positions in the local oil industry
fell to 31% from 33% in 2002, and the proportion of women in senior positions
dropped to 11% from 16%.
Sasol, Asian Firm to Set Up Joint Plant in China
Chemicals company Sasol and Asian group Wilmar Holdings have agreed to form a
joint venture to build a fatty-alcohols plant in the industrial port city of
Lianyungang in China at an as-yet undisclosed cost. At 60000 tons a year, the
plant would be the first "world-scale" alcohol plant in China, Sasol's
olefins and surfactants business in Germany said May 24. Construction could
start as soon as September this year and the plant could be commissioned by the
middle of 2007, subject to the board approval of both companies. Fatty- alcohols
are used to produce a wide range of goods such as cosmetics, textiles and
detergents. Sasol Olefins and Surfactants MD Anton Putter said Wilmar's
leadership in tropical oils and established presence in China, combined with
Sasol's leadership in the alcohol market, created significant synergy.
Establishing the first world-scale alcohol plant in China would allow Sasol to
continue to grow with key multinational customers as they expand their
operations in Asia, he said. Sasol would be the exclusive distributor for the
sales and marketing of the alcohols produced by the joint venture. The feedstock
would be fatty acid, produced at the same location by Wilmar. Sasol said it was
the largest global producer and marketer of C6+ alcohols - a type of fatty
alcohol - with capacity of more than 600000 tons a year. Sasol Olefins and
Surfactants have production operations in German, the US, Italy and SA, with
smaller operations in Slovakia, the United Arab Emirates and China. Sasol
Olefins and Surfactants accounted for 28% of Sasol's turnover last year.
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