|
Books on South Africa
REPUBLICAN REFERENCE
Area (sq.km)
1,219,912
Population
43,586,097
Capital
Pretoria
Currency
rand
President
Thabo Mbeki
|
Update No: 053 - (02/06/06)
South Africa's former deputy president, Jacob Zuma, was
acquitted of rape on May 8th following a 3 month trial. While Zuma's camp was
still celebrating his court victory and gearing up for the two corruption trials
scheduled for July, the mood at the African National Congress (ANC) headquarters
was understandably subdued as the full implications sunk in. While Zuma remains
politically dented after a damaging trial, his acquittal and the jubilant street
reaction to it will send a signal to the ANC hierarchy that he remains the
party's most popular leader. Zuma's corruption trial is likely to be tougher to
beat. The ball has been pushed back into the ANC hierarchy's court. Whether Zuma
can re-group and gain enough momentum to re-launch his presidential campaign
remains to be seen.
Jacob Zuma upped the ante in the ANC leadership succession race May 9 in an
emotional apology to the nation for his lapse in judgement when he had
unprotected sex with his HIV-positive rape accuser. The apology further
signalled a resumption of the intense rivalry between Zuma and President Thabo
Mbeki for public leadership on the issue of HIV and AIDS, arguably the country's
biggest social and economic crisis. He did not comment on Mbeki's stated desire
to see a woman succeed him, interpreted by many in the party as an attempt to
bolster Deputy President Phumzile Mlambo-Ngcuka, who Mbeki chose to replace Zuma
in the cabinet. If Zuma resumes his party responsibilities this would give his
many detractors in the National Executive Committee (NEC) cause for concern as
his popularity with the party's rank and file has not waned. If Zuma is also
acquitted of corruption in July, his march to the party's highest office could
be unstoppable, but he will be fortunate indeed if he can get off this very
serious charge. In a real sense the impartiality of South African justice itself
is on trial as it can be safely assumed that the Zuma supporters will use any
means, fair or foul to get him acquitted. So far, the courts have acted
commendably. He received the benefit of reasonable doubt in the rape case, but
the evidence in the corruption case is of an altogether weightier character.
Eveything - Zuma's future, the leadership of the ANC, who will be the next
president when Mbeki's term expires in 2009, depends on the outcome of this
trial. Even more -this is the first time that any "African Big Man"
has been on trial for corruption. Many other "Big Men" in other
African nations and their better informed citizens, will be waiting and
watching.
President Mbeki faces the grim prospect of open rebellion in the ANC and its
allies, with a growing tide of criticism of his stewardship of party and state
threatening to engulf the final three years of his presidency and weaken him in
the succession struggle raging in the party. The Congress of South African Trade
Unions (Cosatu) launched a full-frontal attack on Mbeki's presidency May 25,
warning that both the ANC and South Africa under Mbeki were "drifting
towards dictatorship". The South African Communist Party (SACP) also voiced
criticism of an "overly powerful Presidency", and the powerful
National Union of Mineworkers (NUM) gave Jacob Zuma a ringing endorsement.
Cosatu has accused Mbeki of using state institutions and the media to settle
political scores inside the ruling party. "A frightening culture has
developed in the ANC of cutting corners and not only to ignore internal
democratic processes but to be contemptuous of them. This culture leads to the
use of leaks to the media to take forward individuals' narrow agendas,"
said Cosatu general secretary Zwelinzima Vavi. The attack built on the SACP's
criticism of Mbeki's "imperial presidency", which it said sidelined
the ANC and its alliance and undermined democratic institutions. The tone of the
latest barrage against Mbeki signals that the left inside the alliance has
stepped up its offensive for control of the party, sensing Mbeki's weakened
position following Zuma's acquittal on rape charges.
Thousands of South African workers took to the streets to protest against
unemployment and poverty mid May. The strikes relate to continued poverty and
unemployment at a time of supposed continued economic growth. Many argue that
the economy is still not creating enough formal sector jobs. The country's
official unemployment rate is 26.5 percent, but analysts say it is as high as 40
percent. The National Union of Mineworkers (NUM) said the mining sector had laid
off between 40,000 and 50,000 workers over the past two to three years under the
pretext of a strong rand currency and a weak United States dollar price for
gold. In the same period, according to the Southern African Clothing and Textile
Workers' Union, more than 62,000 clothing, textile and footwear jobs were lost
because local employers were unable to compete with cheap imports from China and
either had to close shop or downscale their operations. The major stumbling
block in job creation is the lack of skills. The Joint Initiative for Priority
Skills Acquisition (JIPSA) was launched earlier this year to address the
shortage of skilled labour. The International Monetary Fund (IMF) projects a
required annual growth of at least seven percent to meet the UN's Millennium
Development Goal of halving poverty by 2015. Mozambique is the only country in
the region to have achieved this target.
Emerging market jitters have sent the rand to a six-month low of R6,67 to the
dollar. The JSE's all-share index is down about 11% since the beginning of May.
President Mbeki said South Africa's economic fundamentals remained sound and the
falls were pretty much in line with other comparable emerging markets.
"Some countries have done a little worse. South Africa has therefore not
negatively been singled out among the emerging markets," he said. A poll of
analysts conducted by Reuters found that economic growth probably accelerated to
4,2% in the first quarter of 2006. Domestic demand was strong and manufacturing
and mining output had recovered.
The South African AIDS lobby group, Treatment Action Campaign (TAC), will be
back in court in three to four months' time for another round with German
vitamin entrepreneur Matthias Rath. This time the ministry of health and the
Medicines Control Council (MCC) are also being dragged into the fight for their
alleged lack of action against Rath, who has claimed his vitamins were more
effective than antiretroviral drugs in treating HIV/AIDS. Rath has been able to
continue selling his vitamins as anti-AIDS medication, despite a year-long
investigation by the MCC. TAC spokesman Nathan Geffen said he believed the MCC
had acted negligently. "From everything I have seen and heard ... no proper
investigation has taken place into the activities of Matthias Rath, despite
complaints being lodged by ourselves and other organisations and
individuals," he told the South African Broadcasting Corporation.
ANC Succession Crisis
The succession battle is likely to deepen after ANC leaders failed to agree
on a strategy to manage the crisis May 27. This has led to accusations and
counteraccusations of conspiracy and plotting from the party's main contending
factions. ANC secretary-general Kgalema Motlanthe conceded May 29 that the party
traditionally made no provision to manage its leadership race. "In the ANC
there is no provision for succession. It's a foreign concept to the ANC.
Succession happens in dynasties. We elect national leadership," he told
reporters following a three-day meeting of the party's national executive
committee (NEC). The ruling party is now awash with paranoid conspiracy theories
as leaders jostle to grab the mantle from President Mbeki when his term as ANC
president ends in December next year and as president of the country in 2009.
ANC deputy president Jacob Zuma is on record as saying that unnamed party
colleagues were using state resources to frustrate his presidential bid. Sources
who attended the tense meeting said Mbeki himself complained bitterly about
attempts by "ultra left forces" to topple him as the party and South
African president, and appealed to the NEC to come to his defence. The sources
said Mbeki was referring to statements by ANC allies the South African Communist
Party (SACP) and Congress of South African Trade Unions (Cosatu). The allies
warned against a "slide towards dictatorship" under Mbeki's
"imperial" presidency. However, the NEC, which has been split down the
middle by the fallout between Mbeki and Zuma, refused to accept that there was
any conspiracy against Mbeki. Last year the NEC also rejected Zuma's assertion
that there was a conspiracy against him. Instead, in what appeared to be an
attempt to paper over the cracks and also placate Mbeki, the NEC gently chided
Cosatu and the SACP over their claims of dictatorship and over-centralisation:
"Statements about tendencies towards 'dictatorship' and the centralisation
of powers within the ANC and government presidencies, among others made, are not
borne out by reality. Unless properly rebutted, these statements may cause
confusion and uncertainty among the membership of the alliance and among the
broader public."
Zimbabwe Meltdown Could Lead to Policy Shift
South Africa has expressed its alarm over the deepening political and
economic crisis in Zimbabwe, with Deputy Foreign Minister Aziz Pahad saying the
increased number of refugees fleeing the meltdown called for an urgent solution
to the crisis. Pahad's remarks to journalists May 17 at a parliamentary briefing
broke government's silence over the unfolding decline in SA's northern neighbour.
His comments are the loudest so far from any senior South African official on
the crisis. Depending on how they are followed up, Pahad's remarks could sound a
decisive break with the 'quiet diplomacy' policy that has been implemented up to
now. To be more effective, Pretoria will have to exert pressure to signal its
dissatisfaction at having to pay the price of mis-governance in Zimbabwe. The
seven-year economic decline is now a real threat to South Africa the policy of
quiet diplomacy in dealing with Zimbabwe has failed to bear fruit. Pahad said
government "remained seized" with the Zimbabwean situation. "We
have been concerned about the deteriorating economic situation, where inflation
has now reached 1000%, and the predictions are it can get worse," he said.
"We remain concerned not only about the effects on the people of Zimbabwe,
but the effect on the region as a whole, because Zimbabwe is an important
player." Pahad said that there were at least 2-million Zimbabweans living
illegally in SA, and that the number of Zimbabweans applying for visas at the
South African embassy in Harare had been increasing alarmingly. "By any
standards 2-million is high even if it's not as much as this, it is high. Pahad
hinted that SA was placing its hopes for a solution on a United Nations (UN)
plan to broker a deal. UN Secretary-General Kofi Annan, who is expected to visit
Zimbabwe this year, is under-stood to be working on a plan, with President
Mbeki's backing, to resolve Zimbabwe's political problems. The plan involves an
aid package for Zimbabwe on condition President Robert Mugabe gave a timetable
for his departure. If Mugabe accepted the UN plan, he would be given immunity
from possible prosecution for human rights abuses. However, Mugabe is relying
increasingly on the military to run the country as a protection against possible
urban riots, and is putting in place a transition strategy for when he is gone.
This "creeping coup", with Mugabe's connivance, is designed to ensure
the grip on the country by the Zanu (PF) is maintained in the post-Mugabe era.
That will mean continued stolen elections and economic decline. But events may
overtake these transition plans. Hyperinflation, now at 1000%, high unemployment
and extreme food shortages mean most Zimbabweans cannot meet their basic needs.
It also means that Mugabe's rewards for those whom he relies on to stay in power
are being diminished rapidly. The government has delayed paying salaries to some
in the public service, the police and the military. This will soon erode the
pillars of support for the Mugabe regime, which clearly knows that economic
decline is its prime threat. Not only does it threaten military and
public-service support structures, it also increases the chances of urban riots.
Ultimately, the driving force behind any future change will be Zimbabweans
themselves, but SA can play an important role. All the signs coming out of
Zimbabwe are of a humanitarian and human-rights crisis. These are the type of
early warning signs that should demand that the African Union and the Southern
African Development Community address the issue. The potential is for another
Darfur, albeit in a different form. The South African government seems finally
to be coming round to the view that quiet diplomacy has failed, and a new
initiative is needed. A united effort by government, the UN and regional bodies
may yet avert the political and economic implosion of Zimbabwe.
Pan-African Parliament: US$6.1m Cash Crisis
Pan-African Parliament (PAP) MPs said May 11th that Libya and its supporters
were acting as sore losers by plunging the Midrand-based body into a financial
crisis. The chairman of the PAP's monetary and financial affairs committee,
Kenyan MP Wycliff Oparanya, said that the three-year-old body was short of
US$6,1m and, as a result, "may not be able to hold its sixth session"
in October. He said the current session, which ended May 12th, had to be cut by
half because of the unsolved financial problem. Sierra Leonean MP Ibrahim Sesay
said Libya had wanted to be the host of the PAP but had lost out to SA. It was
now acting as a spoiler, with the support of Algeria and Egypt. As host, SA has
budgeted R80m for the building, infra-structure and operating expenses of PAP.
Oparanya, who returned from talks in Addis Ababa with African Union (AU)
officials, said he had been told that the main reason the AU was unable to meet
its full US$12m contribution to PAP this year was because there had been a
shortfall in the membership dues paid to it. Four of the five largest
contributors, which together provide 75% of the AU budget, had failed to pay
their membership dues this year, he said. SA has paid in full but Algeria,
Egypt, Libya and Nigeria have not. Of these four, Algeria, Libya and Nigeria
were all significant oil producers. With the oil price now at more than US$70 a
barrel, they were quite capable of paying. Oparanya said 15 AU countries had
been in arrears for more than three years and were facing sanctions. This meant
they would be reduced to observer status. Oparanya said an appeal for funds
would be made at an African heads of state summit in Gambia this year. "As
a last resort," Oparanya said, "the parliament may have to approach
international donors to help the body through the crisis". Consideration
had been given to a levy on multinationals for African development last year but
the idea had been abandoned. Oparanya said PAP was already operating under
conditions of financial stringency. For instance, instead of hiring a full
complement of more than 90 support staff, it had only 22. Until recently, Libya
had been a significant contributor to AU coffers and had even helped other
countries pay their fees. It was supported by Algeria and Egypt In its campaign
to host PAP
Competition Commission Tribunal Targets Former Utilities
Former state utilities have often been accused of breaking competition
rules. This was illustrated when South African Airways (SAA) was slapped with a
R55m fine for price-fixing and colluding with its competitors. This follows
another R45m fine for SAA last year, and a hearing involving dominant steel
producer Mittal, which first grew fat on state support as Iscor. Telkom, for a
long time accused of stifling competitors, will soon face accusers at the
competition authorities over its plan to buy Business Connexion. Then there is
Sasol, already a frequent flyer at the Competition Tribunal. Last year, Sasol
faced a rough tribunal hearing over a complaint about discriminatory pricing
from minnow Nationwide Poles. That decision went in favour of Nationwide
initially, but was overturned by the Competition Appeal Court in December. In
effect, that decision held that it wasn't particularly bad of Sasol to charge
smaller buyers more for products than it charged its larger, cosier customers.
Then there was Sasol's mooted merger of its liquid fuels business with that of
Engen, a merger it failed to charm the Competition Tribunal into giving it the
green light. Now, Sasol will have to prepare its bosses for yet more time at the
tribunal on the charmless campus of the trade and industry department in
Pretoria. This time, its fertiliser business has hit the competition fan. First,
small fertiliser supplier Nutri-Flo, which bought fertiliser from Sasol,
convinced the Competition Commission to refer its complaint to the tribunal for
a full hearing. Sasol, Nutri-Flo says, was overcharging for fertiliser and
fixing prices. Although Sasol tried unsuccessfully to fight this referral, the
Competition Appeal Court says it must go ahead. Not that Sasol was likely to
have got away with it, the commission said it would also be forwarding another
complaint over Sasol's fertiliser division to the tribunal, this time from
Profert. There is a bright side: if the Competition Tribunal ever introduces a
loyalty programme, then Sasol could stand to recoup at least a fraction of the
millions it has shelled out in Pretoria.
OECD Backs Agricultural Reforms
Agricultural development backed by a broad range of policies to boost
economic growth and tackle social inequities is critical for alleviation of
poverty in South Africa, says an expert at the Paris-based Organisation for
Economic Co-operation and Development. The 30-nation club has carried out a
comprehensive review of agricultural policies in South Africa. "The basic
message of the report is that South Africa has undergone extensive reforms since
the transition from apartheid to democracy in 1994. But there is much more that
needs be done," said project leader Václav Vojtech. Agriculture comprises
3.4 per cent of the country's Gross Domestic Product (GDP) but employs 30 per
cent of the labour force. Industry accounts for 25 per cent of employment, and
the services sector 45 per cent. The report states that "The South African
economy, including agriculture, is increasingly integrated in world markets with
about one-third of agricultural production exported," it says. "It is
among the world's leading exporters of such agro-food products as wine, fresh
fruits and sugar. At the same time, South African agriculture is highly
dualistic with a small number of commercial operations run predominantly by
white farmers and large numbers of subsistence farms run by black farmers."
The OECD report says "these pressures need to be considered in the context
of land reform, agricultural support programmes to disadvantaged farming
communities, and Black Economic Empowerment (BEE) measures meant to address past
injustices." In conjunction with business, the government began enforcing
BEE acquisitions and shareholding in South African companies. "Continuing
the land reform process, providing adjustment assistance, and trade development
are the most important agricultural policy challenges," the OECD report
says. South Africa is a net food exporter, farming accounts for 8 per cent of
the country's total exports of 51 billion dollars a year. It is the world's top
exporter of avocados, tangerines and ostrich products, and is a large exporter
of grapefruit, plums, pears and grapes. Highlighting the significance of an
appropriate global trade environment, the OECD estimates that a 50 per cent cut
in import tariffs and export subsidies around the world, together with a 50 per
cent reduction in domestic support to agriculture in OECD countries would
benefit the South African economy.
«
Top
AUTOMOBILES
Vehicle Exports Up 58%, Heading for Record
New export programmes by local vehicle manufacturers were behind the 57,7%
increase in vehicle exports in the first quarter of this year, the National
Association of Automobile Manufacturers of SA (Naamsa) said May 15. Major
vehicle manufacturers such as Volkswagen SA, Toyota SA, Daimler Chrysler SA and
Ford Southern Africa have multibillion-rand export contracts, while General
Motors SA (GMSA) has said it would make the country its main export base for its
Hummer H3 vehicles. GMSA will start manufacturing the H3 in Port Elizabeth this
year. In its review of the first quarter of this year, Naamsa said new vehicle
exports increased from the previous corresponding period's 24,442 units to
38,541 units. It said higher projected exports of cars and light commercial
vehicles, in particular, were likely to lead to record export sales this year.
"Overall, exports are projected to improve by more than 50% year on
year," it said. Last year the industry exported about 140,000 units. Naamsa
director Nico Vermeulen attributed the increased exports to contracts won by the
various manufacturers. "The contracts have ramped up exports," he
said. Over the same period, the industry's employment figures increased by more
than 1000 jobs to 36,184, which is 3% higher than the end of last year. Naamsa
said 36,184 jobs was the highest aggregate level in the past eight-and-a-half
years. It said the rapid expansion in employment in the first quarter was in
addition to the 2,589 new jobs created last year. Vermeulen said the growth in
employment was consistent with increased production for local consumption and
exports. In the first quarter, sales for passenger vehicles increased 21,2%
compared with the same period last year, while new commercial vehicle sales
increased 23,9%, compared with last year. Naamsa said that, in addition to
favourable interest rates and manufacturers' incentives, the industry benefited
from new vehicle affordability. According to Wesbank, the average price of a new
car last year was R183 744. This compared with the average price in 2002 of R185
037.
«
Top
FOOD & DRINK
South Africa: Beer And Profits
As SABMiller reported another consecutive year of earnings, revenue and
volume growth, it seems the group has achieved a comfortable balance in its
brand portfolio and global exposure to maximise the benefits of growth in the
global beer market. The largest stake of the group's earnings for the year to
April 2006 came from South African Beverages, with 31%, followed by the newly
expanded Latin America division, with 22%. Europe, its third-biggest market,
accounted for 17% of earnings, while the North American division and the African
and Asian division contributed 14% and 13%, respectively. While the geographic
spread is diversified, so is the brand portfolio, with SABMiller's presence in
SA, Poland, the US and Honduras covering all spectra of the beer market, from
economy and mainstream brands to so-called "worth-more" or premium
labels. Group chairman Meyer Kahn says the group has built "one of the most
attractive brand portfolios in the global beer market," which will allow it
to benefit from long-term growth in a competitive industry. Sources of growth
for the group in the medium to long term would come from beer's increasing share
of the alcoholic beverage market, and from consumers trading up to more
aspirational, and expensive, premium brands, CE Graham Mackay said.
Premium beer as a percentage of total lager consumption was strongest in Europe
and North America during 2004, according to the group. However, encouraging
signs have been seen that this trend is to spread and continue in markets such
as Eastern Europe, SA, and even Central America, which should have a positive
effect of margins and earnings
«
Top
GLOBALISATION
South African Diversification
There was widespread concern in the late 1990s that the government's decision to
allow major local companies such as Billiton, South African Breweries, Old
Mutual and Anglo American to move their primary listings offshore would be
detrimental to the economy. It took a while for those concerns to be proved
baseless but the required leap of faith, it should not be underestimated, given
the tripartite alliance's socialist leanings, has been vindicated in recent
years as inward investment has gained momentum and the benefits of globalisation
have started to kick in. With a decade of political stability under the belt,
economic growth solidly on track to average 5% this year and the equity market
booming, SA started to attract significant inward investment, of both the
portfolio and more desirable fixed variety. Barclays bought a controlling stake
in Absa for almost R30bn last year, while Vodafone coughed up more than R20bn to
increase its Vodacom holding by buying out Venfin, lifting inward investment to
a record level that matched total investment outflows for the first time in
decades. But this year the trend appears to have been reversed, with a spate of
announcements by South African companies of major offshore acquisitions. April
saw private hospital groups Netcare and Medi-Clinic announce deals in the UK and
Dubai respectively that totalled R24bn, and cellular group MTN revealed early
May that it planned to buy out Dubai-based Investcom for more than R33bn. Should
alarm bells be ringing anew over so much cash leaving the country? Leading
investment analysts do not believe so, pointing out that the two-way investment
flow that has developed is not only a sign of a more normal economy than the
concentrated and internationally un-competitive structure that existed
post-1994, but that South African companies are behaving no differently from
their international peers. Old Mutual's recent decision to relocate some of its
South African staff from Cape Town to Johannesburg is likely to have been
prompted partly by its experience in the UK, for instance, where setting up
headquarters anywhere other than in London, the country's economic engine room,
would be unthinkable. The diversification argument is supported by Old Mutual
Asset Managers economist Johann Els's who believes that while SA is far better
placed to withstand an emerging market crisis than the last time this happened
in 1998, the risk of such a correction taking place has increased of late. The
appetite for emerging market investments remained "exceptionally
strong" during the first four months of the year, he said, with more money
flowing in than during the whole of last year. However, jitters had appeared in
some emerging markets, with the currencies of Iceland, Hungary and New Zealand
depreciating sharply during the first quarter. While these economies had certain
characteristics in common -- large current account deficits and slower growth
than in other emerging markets more such events could trigger nervousness about
emerging markets as a whole that could spill over into SA. In addition, an
external shock such as sharply higher global interest rates or an oil crisis
could spark a run on emerging markets. Analysts say such concerns are a
legitimate reason for South African companies to buy assets in developed markets
as a means of diversifying and spreading risk.
South African Companies Still Wary About Africa
South African companies are not less risk-averse than their European and
American counterparts when doing business in Africa. This is one of the many
surprising findings of the South African Institute of International Affairs'
three-year Business in Africa project, presented at an international conference
on African private-sector development late May. The research, which was
conducted in nine countries across the continent : Botswana, Egypt, Ghana,
Kenya, Mali, Mozambique, Nigeria, Senegal and Zimbabwe, found that despite the
perception that South African companies were moving aggressively into Africa,
the percentage of foreign direct investment in the region was still marginal in
comparison with overall South African investment going to Europe, the Americas
and Asia. More than 80% of SA's total foreign investment was still directed at
these three markets. Analysis presented by Andrea Goldstein of the Organisation
for Economic Co-operation and Development corroborated this finding. South
African multinationals tend to invest much less in their immediate region than
multinationals from other emerging markets. Taking SA's foreign assets in Africa
as the benchmark for measuring interest in Africa, in 2004 the region attracted
only 4,9% of total South African investment (both stocks and flows). Although
this is better than the 3% of total investment flows that Africa attracted from
the rest of the globe in the same period, it is not significantly more. South
African firms' risk perception of doing business in Africa is thus quite closely
aligned with that of the rest of the world. However, where South African
companies do distinguish themselves is in their willingness to invest in a broad
range of sectors, unlike Africa's traditional investment partners who have
focused on oil and mining. SA's entry into telecommunications and retail in the
region as the most visible manifestation of SA's corporate presence has fuelled
the perception that South Africans are everywhere and that the rest of Africa is
a profitable outpost for South African business. Shoprite Checkers is now the
largest retailer in Africa with more than 600 outlets in 16 countries. But
because of Africa's small markets and low disposable income, revenue earnings
from Africa are still modest in comparison with its operations in SA. It is a
mistake to assume that high returns on investments, up to 30% in some sectors in
Africa, automatically translate into high earnings. For companies, one of
Africa's biggest hurdles in growing the market is the high level of poverty in
individual markets and the small size of the formal sector. The size of the
informal sector, up to 60% and more in some economies, is one of the biggest
indicators of the constraints hampering the more robust development of Africa's
private sector. Two of the most striking findings of the report are firstly that
political and economic governance are hugely important if the goal is a more
diversified, mature and growing economy. Secondly, engagement between the public
and private sector is essential in enabling the private sector to play a
stronger role in the sustainable development of the continent. While there are
many complex factors contributing to the weak state of Africa's private sector,
some low-cost interventions can reap immediate benefits. Governments providing a
supportive framework will attract more investment into the economy from
foreigners, and local players. It will also ensure that South African companies
will be more confident in the continent's prospects.
«
Top
HIV/AIDS
Public Health Costs Will Soar
Researchers say they are bracing for a sharp rise in the cost of public health
services in South Africa within the next few years, due to HIV/AIDS. And, they
warn that the country's health department might not be able to cope with its
ever-growing responsibilities if government fails to increase the department's
budget substantially. Large numbers of HIV-positive South Africans are expected
to develop AIDS-related diseases, as the country's high prevalence rates start
manifesting themselves in illness and death, predicts the Health Economics &
HIV/AIDS Research Division (HEARD) of the University of KwaZulu-Natal, in the
coastal city of Durban. "HIV patients might soon account for 60 percent to
70 percent of hospital expenditure in medical wards," says HEARD researcher
Nina Veenstra. Already, about half of all patients admitted to hospitals in
South Africa seek care for HIV-related illnesses, while the numbers of
HIV-positive patients in paediatric wards are even higher, she added. According
to figures posted on the website of the Joint United Nations Programme on
HIV/AIDS, adult HIV prevalence in South Africa is 21.5 percent. As the numbers
of AIDS patients grow, there will be a greater demand for skilled health
workers, medication and hospital facilities. Greater pressure on health
facilities will impose a heavier financial burden on the country's public health
care sector, even as health workers suffer more stress from an increased
workload. This is likely to prompt higher levels of absenteeism, low staff
morale, and large numbers of health care workers quitting their jobs. South
Africa already suffers a shortage of health workers, due in large part to
unattractive working conditions. Many posts for health workers remain vacant,
notes a study by a national research organisation, the Durban-based Health
Systems Trust (HST). The HST has already found that a number of sites where
anti-retroviral drugs (ARVs) are dispensed have reached saturation level due to
staff shortages. HST researchers estimate that only 12 to 13 percent of all
patients in need of ARV therapy are receiving it at present. "Limited human
resources capacity is the biggest constraining factor on further rollout of the
ARV programme and must be addressed as soon as possible," state researchers
Rob Stewart and Marian Loveday in the organisation's annual health review for
2005. In addition, the already-limited number of health care workers will be
further reduced through HIV-infection. According to an HSRC study, 13 percent of
health workers who passed away between 1997 and 2001 died of AIDS-related
diseases. These findings are likely to receive attention during the latest of
the United Nations General Assembly Special Sessions (UNGASS) on HIV/AIDS from
May 31 to June 2 in New York. In 2001, the assembly held its first special
session on HIV/AIDS, in acknowledgement of the fact that while some progress in
increasing access to HIV-prevention and treatment initiatives had been made, the
programmes were still failing to reach those most vulnerable to HIV. During the
first UNGASS meeting, participants agreed on goals set out in a 'Declaration of
Commitment on HIV/AIDS' which was adopted by leaders from 189 countries. The
declaration sets targets to halt and reverse the spread of the pandemic by 2010
through action by government and civil society. Together with other countries,
South Africa vowed to improve conditions for health care workers, and upgrade
supply systems and financing plans concerning access to ARVs, testing facilities
and care by 2005. Delegations from South Africa will have to report back on
progress in achieving these goals at the UNGASS+5 meeting. The cost of
full-scale ARV treatment is expected to come with a price tag of about 996
million dollars by 2008/2009, up from 179 million dollars in 2005/2006,
according to the HST.
«
Top
INTERNATIONAL ECONOMIC RELATIONS
South Africa and Indonesia Strengthen Trade Relations
South Africa and Indonesia are making headways in removing transport barriers
blocking the flow of trade between the two countries. Lack of direct
transportation between South Africa and Asian countries has been a major
challenge for efficient trading. The issue of transportation also came under the
spotlight during the Asia-Africa Trade and Investment Conference (AATIC) held in
November 2004, where delegations from African countries complained about
difficulties experienced in accessing Asian markets due to transport barriers.
Indonesian Trade Minister Dr Mari Pangestu said May 23 that her country and
South Africa were steps ahead in resolving the problem. "This is an issue
which is receiving attention at the moment," said Minister Pangestu, adding
that discussions between the South African Airlines (SAA) and a trade committee
from Indonesia were at an advanced stage to address direct flight setbacks.
Trade and Industry Minister Mandisi Mpahlwa also shared the sentiments, saying
he hoped "over the course of time we will overcome the problem". He
noted that the issue of transport links was one of the items scheduled to be
discussed May 23 at first meeting of Joint Trade Committee (JTC) between South
African government representatives and Indonesian government trade team. As part
of efforts to consolidate trade agreements entered into in 1997, and addressing
impediments in their trade relations, South Africa and Indonesia launched the
JTC. The JTC is tasked with reviewing existing trade relations, identifying
obstacles barricading effective flow of trade between the two countries. Over
and above this, and according to the Joint Statement signed by both countries in
April last year, JTC will oversee implementation of trade deals that would be
signed by these countries in the future. Mr Mpahlwa pointed out that this trade
task team (JTC) should explore "ways and means" of increasing
investment and improving trade relations. "The challenge, however, in
addition to the growing volume of trade, lies in changing the structure of trade
to ensure greater diversity in traded products and services, and more
effectively reflect the capacities of the two economies," said Mr Mpahlwa.
Issues under discussion at the meeting include, among others, promotion of
trade, encouraging greater industrial co-operation, facilitation of co-operation
between business communities and ways to encourage direct banking between South
Africa and Indonesia. The meeting will also explore ways of forging stronger
ties in encouraging trade between small and micro businesses in the two
countries. Indonesia is SA's fourth largest export trading partner while Asia is
South Africa's second largest trading bloc after the European Union.
Agreement On Science Matters Signed With Argentina
South Africa and the Argentine Republic have signed an agreement on scientific
and technological co-operation. Speaking at the signing ceremony, Science and
Technology Minister Mosibudi Mangena said the agreement was part of a broader
mechanism to enhance relations not only between the two countries but also to
strengthen the South to South co-operation. "Our joint efforts will create
the necessary space for sharing of skills, technology transfer and exchange of
knowledge amongst key players in our science and innovation systems and to
ensure that we are better able to respond to socio-economic challenges," he
said. He said the South African government had realised that knowledge and
innovation remained the critical factors in the development of the country. In
this regard, he noted: "we have a duty to create an enabling environment
for investment in scientific infrastructure to build our country." The
Minister also said that the country faced a challenge to grow young scientists
who would be able to swing with the increased technological changes of
globalisation. "It is crucial that we develop the next generation of
scientists who can create new knowledge for the benefit of all," and added
that "it is through co-operation such as this that we remain positive and
confident that we are in the right direction." This co-operation covers
other issues such as agriculture and live stock, ICT, Industry, Mining and
Geology, Health and Social Sciences. The Argentine Republic delegation expressed
their commitment to the agreement.
«
Top
MANUFACTURING
Manufacturing Stages Cautious Recovery
The manufacturing sector is showing signs of a recovery, with production rising
in March, raising hopes that the economy grew at a faster pace in the first
quarter of this year after last year's disappointing fourth quarter. Growth in
the sector remains under pressure, however, as the rand continues to receive a
boost from robust metal prices and positive sentiment regarding future prospects
for the country's economic performance. The rand has gained almost 5% since the
beginning of this year, although further gains have been halted by concerns
about SA's widening current account deficit and an "invisible hand" in
the market that has restricted the currency from piercing below the
R6-to-the-dollar level. Manufacturers catering to the local economy have
benefited from buoyant consumer demand, while those exposed to international
markets have not been so lucky, mainly as a result of the strong rand.
Statistics SA said May 11 that manufacturing production grew 5,7% in March.
Month on month, output rose 1,7%. In the three months to March, manufacturing
production grew 1,1%. "The recovery in manufacturing performance is
welcomed and enhances prospects for another year of solid economic growth and
healthy earnings growth in the manufacturing division," Vunani Securities
chief economist Johan Rossouw said. He said manufacturing performance was
expected to remain resilient over the course of this year, although the risk of
an early interest rate hike had increased over the past few months. "Should
that happen, the eventual full-year manufacturing outcome should be more
benign," Rossouw said. Manufacturing, the economy's second-largest sector,
rose a revised 4% year on year in February, its slowest pace in three months.
The sector's poor performance has fuelled speculation that the Reserve Bank may
trim rates, as it did last year, to revive the economy's production sector.
However, with oil prices at current levels, and showing no signs of abating, a
rate cut is out of the question, economists say. Neither do they expect a rate
hike. "Overall, the numbers suggest that producers are still benefiting
from strong local and external demand conditions, despite the strong rand,"
JP Morgan economist Marisa Fassler said. The rise in production is in line with
Investec's purchasing managers' index , an indicator of manufacturing activity.
After a decline below 50 index points in the first two months of this year,
indicating a contraction, the index rebounded, recording 51,5 in March, and 54,3
last month. The economy grew at 3,3% in the fourth quarter of last year, far
below expectations of 4%. This came after the manufacturing sector made no
contribution to overall growth during the quarter, bringing growth for the whole
of last year to 4,9%, just shy of the much-anticipated 5%.
China Restricts Textile Exports to South Africa
China has committed itself to restrict textile exports to SA, a senior Chinese
commerce department official said May 29 ahead of a tour to SA and several other
African states by Chinese Premier Wen Jiabao. SA's textile industry has been hit
hard by imports of cheap textiles and ready-made products from China. Western
Cape, where the country's textile industry is concentrated, has faced a wave of
factory closures and job losses. The indication that an agreement has been
reached on textiles comes on the eve of a visit to Beijing by Deputy Foreign
Minister Aziz Pahad. Pahad's talks will lay some of the groundwork for a
seven-state tour to Africa by the Chinese Premier in June. The premier's trip,
which will include a two-day stop in SA, is a strong signal of a heightened
focus on Africa by China. China has intensified its political and economic
relations with Africa over the past few years, sending large business and
political delegations to the continent. China needs Africa's raw materials,
including crude oil, to fuel its rapid expansion. A Sino-Africa summit is
scheduled for November this year. Indications are that the deal to restrict
exports to SA is part of an overall cut in the capacity of the Chinese textile
industry that is already under way as a result of agreements with the US and the
European Union (EU), including the UK. While China has reached deals with the US
and EU to restrict textile exports, the deal with SA could indicate a new
awareness that it will have to accommodate demands from Africa on trade.
"The Chinese government fully understands concerns of our trading
partners," Zhou Yabin, director-general for western Asia and Africa in the
Chinese commerce ministry, said. Zhou said nothing had been announced by either
side about the details of the arrangement, as the trade and industry department
in SA was still talking to interested parties. He did, however, say the
agreement was "quite a complicated arrangement". It would involve
restrictions on textiles sales to Africa, as well as an agreement for China to
focus on higher-priced goods and higher-quality products. He said this would be
achieved by requesting some of China's financial institutions to limit credit to
the textile industry. Leading South African investors in China are beer giant
SABMiller and Sasol. Both have invested heavily in large projects in China. Zhou
said May 29 that the Chinese government would be "willing to properly guide
investment by textile enterprises in Africa, if African governments come up with
preferential policies to attract investment". He said, ahead of the
November summit, new mechanisms to stimulate foreign investment by Chinese
businesses and particularly investment in Africa were under consideration.
«
Top
MEDIA
Naspers In $422 Million Brazil Deal
Media company Naspers continued its foray into foreign markets, saying that it
had acquired a 30% stake in Brazil's family-owned Abril Group for $422m. The
deal gives Naspers a foothold in the group, said to be Latin America's largest
media house. According to Naspers, Abril is the largest magazine publisher in
Brazil, with a 54% share of that country's magazine circulation and 58% of
magazine advertising revenues. The company publishes five of Brazil's top 10
magazine titles, including Veja, the fourth-highest-selling weekly in the world.
Abril owns an educational book publisher and, like Naspers, also has a major
stake in a pay-TV network. While Naspers and Johncom are the major shareholders
in M-Net/Supersport, Abril's founding Civita family, directly and through Abril,
own 80% of Sistem de Televisao (TVA), the leading Brazilian pay-TV company.
Naspers said that in the financial year to December, Abril generated revenue of
R7,1bn as well as earnings before interest, taxes, depreciation and amortisation
of R1,3bn. Naspers said it would fund the transaction from its own funds. CEO
Koos Bekker said the deal, which was not subject to any unfulfilled conditions,
was in line with the company's strategy to invest in "promising"
developing countries. "Brazil is an attractive market, where strong
economic growth is expected to drive domestic media expansion. This acquisition
gives us the opportunity to apply our expertise in various media types in
another emerging market, to learn and to participate in growth," Bekker
said. Naspers has established itself in 53 countries in Africa and beyond. This
includes pay-TV subsidiaries in countries such as Greece and Thailand. It also
has investments in Tencent, a Chinese-based instant messaging business. Media24
CEO Hein Brand said Naspers's growth into these markets had shown some success.
"This transaction will create a solid stake in Brazil. We look forward to
working with Abril in sharing media experience in pay- TV, internet, magazines
and book publishing," Brand said. Naspers investment officer Mark Sorour
said the company's investment strategy was to enter high-margin countries
Brazil, Russia, India and China. He said after establishing itself in China and,
now, Brazil, the company was exploring opportunities in Russia and India. Bekker
said Naspers first encountered Abril more than a decade ago "and were
immediately struck by the fact that it was a particularly well-run company with
professional executives". Abril chairman and CEO Roberto Civita said the
transaction would accelerate the company's growth and diversification over the
coming years. Abril said that it would use the money from the transaction to
reduce debt and embark on its own expansion. According to Brazilian newspapers,
the Civita family will retain editorial and financial control of Abril. The
transaction reduces the Civita family's hold in the company to 70%.
«
Top
MINING
Botswana and De Beers Sign New Diamond Deal
The world's largest diamond mining group, De Beers, and the government of
the world's largest diamond producing country, Botswana, signed a suite of
historic deals May 23. The deals entail an extension of leases on De Beers' four
mines in the country by 25 years in exchange for a greater shareholding by
Botswana in De Beers and efforts to build up a local sorting and cutting and
polishing industry in the country. The big hope by Botswana from the agreements
is that the local diamond cutting and polishing industry will be given a
kick-start, which De Beers said could lead to the creation of roughly 3000 local
jobs over five years. With De Beers facing new constraints in obtaining
diamonds, and Botswana accounting for about 56% of De Beers' production by
weight and revenue, the Botswana government had unprecedented power in the
negotiations of more than two years with De Beers. De Beers plans to open two
mines in Canada, and has promised large-scale exploration projects in Angola and
the Democratic Republic of Congo, but it still faces problems in meeting the
growth in demand for diamonds. Under a European Union competition policy ruling,
De Beers will have to gradually scale down and ultimately cease its buying from
Russian diamond miner Alrosa by 2008. Under the deal signed by Botswana's
President Festus Mogae and De Beers chairman Nicky Oppenheimer, the government
renewed the licence for 25 years on the world's most valuable diamond mine, at
Jwaneng. The licences for De Beers' other mines at Orapa, Lethlakane and
Damtshaa have also been extended. Botswana is hoping that the deal, under the
suite of agreements, to establish the Diamond Trading Company of Botswana - a
joint venture between the government and De Beers - will help it diversify away
from its heavy reliance on diamond mining alone. A new $83m facility for the
trading company, which De Beers will fund fully, is now under construction near
Gabarone's airport and is expected to be completed by 2008. Apart from sorting
and valuing local production, De Beers will bring diamonds from around the world
to the new facility to be aggregated into parcels for its sightholders or
clients. Currently this activity takes place in London. Four diamond cutters
currently operate in Botswana, and the government has issued a total of 15
licences, but Varda Shine, MD of De Beers' London-based Diamond Trading Company,
says: "In five years we will have a real industry (in Botswana)."
However, cutting and polishing in Botswana is profitable only for higher-value
diamonds as the process costs four to five times as much as it does in India. As
a result of the deal, Botswana's government will be obtaining an enlarged stake
in the local De Beers subsidiary. That will expand its share of De Beers
globally from 7,5% to 15%. With the Anglo American stake of 45% and the
Oppenheimer stake of 40%, the Botswana government now has enhanced power to
shift control between the two major shareholders. The agreements have not been
made public, but a De Beers spokesman says that the holdings of the two major
shareholders have not been diluted due to the arrangements.
«
Top
MINERALS & METALS
Scrapping Steel Duty Needs Confirmation
The national treasury confirmed that the import duty on steel products remained
in place despite an announcement by the trade and industry department almost two
months ago that the duty had been scrapped with "immediate effect".
Confusion over whether the duty has been scrapped has wreaked havoc in the steel
market, with customers delaying orders from importers in anticipation of a
reduction of prices. The organisation representing steel makers in SA, the South
African Iron and Steel Institute, has also lamented the delay in scrapping the
duty and the uncertainty as to which steel products would be affected, saying it
has hampered the ability of steel makers to plan ahead. "The delay in
scrapping the duty is not only confusing, it is impacting negatively on
downstream steel users who were supposed to be beneficiaries of this move,"
said Francois Dubbelman of trade consultancy International Trade Services May
18. Treasury spokeswoman Thoraya Pandy said the department had received the
relevant documentation from the trade and industry ministry on May 4. Mpahlwa
told Parliament on March 30 that the duty on "certain" steel and
stainless steel products had been scrapped "with immediate effect".
Adding to uncertainty around the duty, Pandy said that Finance Minister Trevor
Manuel had to consider the effects of eliminating the duty before he could sign
it off. "There is a risk that Manuel may question the scrapping of the
duty," said Dubbelman. South African Revenue Service spokesman Adrian
Lackay said the scrapping of the duty would become effective only once it was
published in the Government Gazette. The scrapping is among government's
initiatives to reduce the cost of intermediary materials in SA in order to
stimulate the manufacturing of value-added goods. The trade and industry
department was not available for comment. In March, the department also
announced measures to discourage import parity pricing in order to reduce the
costs of raw materials such as steel and chemicals. The measures include
rejecting applications for government incentives by companies using import
parity pricing.
«
Top
PETROCHEMICALS
Countdown To Sasol's $950m Qatar Operation
Petrochemicals group Sasol will open its gas-to-liquids plant in Qatar on June 6
in a move that will mark the South African company's foray into the global
gas-to-liquids industry. Sasol will launch the project at a time when oil prices
are smashing records, having broken through the $75 a barrel mark recently.
Soaring oil prices have prompted intensified efforts worldwide to develop
alternative energy sources such as liquids from natural gas. Sasol said the
$950m Oryx project in Qatar would be the world's largest and most
technologically advanced gas-to-liquids plant. It would tap natural gas from the
North Field in the Gulf, and turn it into liquid fuels, mainly diesel. Other oil
firms such as Shell are building similar plants in Qatar, dubbed the
gas-to-liquids capital. Oryx is the first step in plans to produce 600000
barrels of liquid fuel a day from natural gas by 2016. Sasol and partner Qatar
Petroleum will produce 34000 barrels a day of cleaner diesel and other fuels,
which Sasol and marketing partner Chevron hope to be able to sell at a premium
to conventionally made fuels. The intention is to increase Oryx's capacity to
more than 100000 barrels a day. The partners are considering building a second
plant with a capacity of 130000 barrels a day. Sasol, which is the smaller of
the two partners, with 49%, said the diesel made from natural gas at the Oryx
plant burnt cleaner and exceeded performance standards of conventional
oil-derived diesel fuel. Sasol expects the cleaner fuels will be well received
at a time when environmental controls are tightening and diesel consumption is
rising. The group says the maximum permissible sulphur content in diesel has
plummeted from 5000 parts per million 15 years ago to 10 now in markets such as
the US, Europe, Japan and Australia. Diesel from the Qatar plant will have a
sulphur content of less than five parts per million, according to Sasol. The
Oryx project partners expected to open the plant early this year, but a shortage
of construction and engineering skills in this field led to delays. Sasol plans
to build its second gas-to-liquids plant outside SA in Nigeria with partner
Chevron. Sasol is scouring other gas-rich parts of the world, such as Australia
and Iran, as venues for gas-to-liquids plants.
«
Top
PROPERTY DEVELOPMENT
AECI in R1,6bn Cape Development
Chemicals group AECI would launch a mixed-use development project with an
estimated value of R1,6bn and spanning 1,85-million square metres an area
roughly the size of Cape Town's central business district, around Somerset West,
the company said May 9. The land, situated between the N2 highway and the coast,
was previously used for explosives and fertiliser production from materials such
as lead, mercury and arsenic. The income generated from the development would
range between R600m and R1250m, depending on the type of development, said Deon
van Zyl development director of AECI's property arm, Heartland. The group told
media and analysts may 9 that its Somerset West site, which would include
residential, office and retail areas, was 90% cleaned up. It had removed 270000
tons of contaminated soil, which would be disposed of by waste group Enviroserv.
AECI, which faces liabilities in relation to land contamination, said it would
spend close to R200m in cleaning up the site, which included the largest wetland
rehabilitation project in the country. Van Zyl said Heartland was awaiting
approval from the City of Cape Town to start with the first phase, which was
scheduled for next year. He could not say what servicing of the land, which
includes installation of services such as water and electricity, would cost.
These costs would be higher than average, given the size of the development, he
said. Van Zyl said an average development income of between R600 and R1250,
multiplied by the square meterage, would provide a rough indication of the
turnover AECI could expect to derive from the new development. AECI, which owns
more than 2400ha of unused land around Cape Town, Durban and Johannesburg, has
also lodged an interdict against the Gautrain development, which it has said
would thwart property development plans at its Modderfontein site, east of
Johannesburg. An analyst said yesterday that AECI was "sitting on a gold
mine" in reference to the unused land the company owned. The land is
generally near the airports of Johannesburg, Durban and Cape Town.
«
Top
TELECOMMUNICATIONS
Vodacom and Telkom Miss Boat in Africa
South Africa's Telkom and Vodacom telecoms operators may be too late to secure a
footing on the continent after a sting of massive deals, say analysts.
Coronation Fund Managers portfolio manager Gavin Joubert said that what is left
on the continent is too small and too pricey to be worthwhile. "Basically
it's too late now," he said. "What's left is very expensive."
International investors have been rallying to gain access to Africa's rapidly
expanding, mainly mobile, telecoms market. Poor access to fixed line services
has resulted in strong support for mobile telecoms. Assets are not cheap though.
South Africa's MTN and Kuwait's MTC have established a massive presence on the
continent, but at a price. MTN's recent offer of $5.53bn for Investcom is a 68
percent premium over the firm's valuation when it floated last year. So while
MTN and MTC's Africa unit Celtel have pushed into new markets, Vodacom and
Telkom have not been successful in expanding north of South Africa's borders.
Although Vodacom dominates in South Africa, it is most certainly not in the same
league as MTN when it comes to Africa anymore, say analysts. Vodacom abandoned a
quest to control Nigeria's third-ranked Vmobile after a legal battle because of
price. Its 50 percent shareholder, Vodafone, also prohibits it from expanding
north of the equator. Apart from a potential deal in the Democratic Republic of
the Congo, it may be difficult for Vodacom to expand significantly beyond South
Africa. Telkom on the other hand has identified acquisitions as a method of
boosting slumping domestic revenue streams. However, given that fixed line
operators on the continent traditionally struggle in the area of access because
of poor infrastructure, it may be too much of a risk to invest in fixed telecoms.
«
Top
|
