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SOUTH AFRICA


  
  

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 159,886 104,235 113,300 29
         
GNI per capita
 US $ 2,780 2,600 2,820 93
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 060 - (02/01/07)

Democracy or 'Big man' politics
The politics of 2006 were dominated by turmultuous events within the ruling African National Congress (ANC) which had their origin in 2005. Deputy president Jacob Zuma's political downfall began in 2005. His removal from the deputy presidency was one of the biggest corruption scandals in the world in 2005. Yet as 2007 begins it is evident that the balance of power has shifted back in his favour. Zuma is still part of the succession race for control of the party and may feel he has every chance of becoming president in 2009. He cleared major hurdles in his march to succeed President Thabo Mbeki as ANC leader with victory both his rape trial and corruption case in 2006. Corruption charges against Zuma were not completely dismissed, leaving the door open for the prosecution to reinstate the charges against him. Unless this happens, Mr Zuma is free to contest 2007's leadership contest of the ruling ANC. Whoever is elected to head the ANC would be favourite to become South Africa's next president. Within the tripartite alliance, the South African Communist Party (SACP) has moved more and more towards Zuma. The Congress of South African Trade Unions (Cosatu) too, has shifted towards Zuma. For many South Africans, Zuma represents the worst in African 'big man' politics. This is not solely an African phenomenon, but it is familiar enough to practically everyone on the continent. Opponents hope Zuma will again be on trial for corruption by next December's ANC conference. However, this 'big man' now sees himself as above the law. 2007 is the pivotal year for the resolution of this whole saga. 

President Mbeki has faced a growing tide of criticism of his stewardship of party and state threatening to engulf the final three years of his presidency. The left of the ANC has progressively stepped up its offensive for control of the party. ANC leaders have failed to agree on a strategy to manage the succession crisis. ANC secretary-general Kgalema Motlanthe conceded that the party traditionally made no provision to manage its leadership race. The declaration by Mbeki, forswearing any desire to continue in office after his second five-year term as president ends in 2009, pleased proponents of democracy and legality in Africa and beyond. However, in December there were calls from the the Eastern Cape branch of the ANC for Mbeki to stand for a third term as president of the party, leading to the possiblity of a third term as president of South Africa.

South Africa received 186 out of the 192 possible votes in the United Nations (UN) General Assembly supporting its candidacy for a two-year, non-permanent seat on the UN Security Council in October. South Africa will become one of three African members of the 15-member Security Council on 1 January 2007, joining the Republic of Congo (Brazzaville) and Ghana among the 10 non-permanent and non-veto-wielding members. A non-permanent seat has obvious limitations, however, there is no shortage of issues for the South African delegation to raise in the council's private consultations and public debates. Pursuing its quest for comprehensive reform of the UN may be at the forefront. With Iraq, North Korea, Iran, Darfur and Somalia dominatig the UN agenda in 2007, South Africa will be hard-pressed to drive issues of poverty and under-development higher up the agenda. There is little doubt that it will be extremely challenging, but South Africa's long-awaited seat at the table gives it an opportunity to influence global opinion on how many issues are dealt with.

After a much criticism regarding South Africa's HIV/AIDS policy there was applause for a renewed drive to face the problem. Government marked World AIDS Day in December, with the release of a broad framework for its strategy over the next five years. South Africa had not been alone in lacking leadership on HIV/AIDS but the promotion of techniques involving garlic, beetroot, lemon and African potatoes to combat the virus was seen as seriously damaging. President Mbeki had been critised for his continued refusal to accept the gravity of the situation. HIV/Aids is having a crippling effect on the workforce of many countries, South Africa is among the worst affected nations. The new proposal aims to halve the infection rate by 2011 and to boost the use of antiretrovirals (ARV). More than five million South Africans are infected with the virus and more than 1,000 South Africans die of Aids-related illnesses every day, but many more are still being infected. Plans to extend treatment to 80% of those who are HIV positive were outlined. Activists have welcomed the new plan, but warned it was still vague and lacked specific commitments. Government has delayed the launch of the full National Strategic Plan for 2007-2011. The framework will be discussed over the next three months culminating in a conference in March 2007, at which a final version of the plan will be adopted.

It is still uncertain whether South Africa will start expropriating white-owned farms in 2007. Under apartheid, blacks were forced off land; government now aims to return property to them, or provide compensation for it. Authorities have committed themselves to reallocating 30 percent of commercial farmland to blacks by 2014. To date, government has favoured a "willing seller, willing buyer" policy for addressing racial imbalances in land ownership. Concerns about land reform have been aggravated by events in Zimbabwe, where thousands of white farmers lost their properties during farm invasions since 2000 and a subsequent fast-track land redistribution program which has proved disastrous for the country's economy. South Africa is caught between a rock and a hard place. It must address the growing hunger for land on the part of black people and, at the same time, avoid going the route of Zimbabwe.

The Democratic Alliance (DA) outmanoeuvred the ANC to gain political control of the City of Cape Town in March. Helen Zille was appointed the city's executive mayor during the council election. The battle for control had been on a knife-edge and the ANC had remained confident their party would continue running the city in coalition with the ID and the AMP. The ANC still managed an overwhelming victory nation-wide in the local government elections. If the ANC had not been afflicted by internal divisions in the province, filtering down to the rank and file it would have outperformed all other election contestants. The party showed amazing arrogance as it sidelined smaller, established parties in favour of the relative new comers.

Economic growth accelerated above expectations in the second quarter of 2006, surging to 4,9%, as a weaker rand offered some relief to the production side of the economy. Analysts forecast that the economy will grow above 4% for the full year, buoyed by growth in the mining and manufacturing sectors. Gross domestic product (GDP) growth, which has been driven mainly by an environment of low interest rates and strong domestic spending, is expected to slow from current levels, following four interest rate hikes by the Reserve Bank in 2006. The economy grew at 4,9% in 2005, and is expected to slow to 4,4% for 2006. South Africa's goal of halving unemployment by 2014 was dealt a blow in a report released in November showing not enough jobs are being created to meet one of the country's biggest challenges. The report shows 10000-12000 jobs being created a month in 2006, which pales in comparison with 2005, when the economy created about 30000 jobs a month. Employment creation is also likely to be slow in 2007. However, in the build-up to the 2010 World Cup the economy is expected to pick up, and more jobs will become available. 

The South African government will spend more than R15bn ($2bn) on hosting the 2010 Fifa World Cup. The bulk of the money will be spent on building new football stadiums and refurbishing existing ones. There is public concern that South Africa will be poorly prepared and not able to afford to host the event. Finance minister Trevor Manuel outlined his plans for the World Cup while delivering a medium-term budget policy statement in October. Government has criticised the Australian press for putting themselves forward as an alternative host should South Africa fail to be ready for the event.

President Mbeki Should Reject Calls for Third Term 
The decision to ask President Thabo Mbeki to stand for a third term as president of the African National Congress (ANC) by the Eastern Cape branch of the party might be interpreted as a power grab by other members, a political analyst warned December 6. Xolela Mangcu, of Wits University, said the perception of a power grab could create a backlash "right in the bosom of the ANC" and result in some kind of violence. Here are 10 reasons why President Thabo Mbeki should reject these calls. First, such a development would take the ANC closer to the edge of the slippery slope of one-man rule. The ANC would be veering dangerously close to changing the constitution to extend Mbeki's stay as leader of the country as a whole. Second, we know the horrors of one-man rule from the experience of other African countries, with Zimbabwe being the latest example. Julius Nyerere used himself as an example of the dangers of the big man syndrome in Africa. "You either supported me or you shut up," he said. "No one could come out and oppose me, because he would be a traitor. If you were working for government, you did not want to lose your job and so you shut up. Occasionally you might even secretly come to me and give me some facts." There are indeed plenty of examples of government mandarins who go around issuing political expletives just to please the "Great Leader". Third, the call for a third term for Mbeki could lead us to a tribal conflagration such as we have not seen in our democracy. The call could be interpreted by all sorts of ethnic entrepreneurs as yet another attempt by the Xhosas to hold on to power. Mbeki and Jacob Zuma should forestall such tribal Armageddon by gracefully exiting from the political stage. It is outrageous for people to suggest that the ANC lacks leaders. What about Cyril Ramaphosa, Tokyo Sexwale, Mosiuoa Lekota, Kgalema Motlanthe and many others? Fourth, a third term for Mbeki at the helm of the ruling party would mean more of the same in terms of public policy. For years Mbeki has refused calls to become a champion in the battle against HIV/AIDS -- the most devastating public policy problem of our times. We would likely see more of the same also in terms of government's economic policy, leading to endless battles with the other members of the tripartite alliance. Fifth, such battles would bring forward the prospects of a split in the ANC. An emboldened Mbeki might be tempted to ostracise the ANC's alliance partners even further. At the moment the other alliance partners do not have a political champion. Such a champion could emerge from within the ANC were Mbeki to be elected for another term. The development of such a leftwing opposition could augur well for our democracy but I doubt Mbeki would want to go down in history as the person under whose leadership the ANC split. Sixth, the call for a third term is a political gambit that could backfire with increasing vocal opposition from within the ANC in other provinces, and could ultimately leave the president with egg on his face. Already, delegates at the Eastern Cape conference give different accounts of what really transpired, putting into doubt the authenticity of the call. It is important to bear in mind that the Mbeki faction won by the smallest of margins, meaning that Eastern Cape will be going to the December 2007 leadership conference with a divided delegation. Seventh, even if Mbeki were to adopt a conciliatory approach to his opponents within the movement, he would be hobbled to act against powerful individuals by the desire to hold the party together, and to get backing for his preferred successor. It could well be that Mbeki's inaction against police commissioner Jackie Selebi has more to do with issues relating to the ANC's internal balance of power than with absence of wrongdoing by the commissioner. After all, Jacob Zuma was dismissed for something far less sinister than what is being alleged against Selebi. Eighth, as political analyst Thabo Rapoo put it, as the former head of state, Mbeki might be tempted to intervene in the processes of government from behind the scenes, leading to confusion about where the buck really stops. Ninth, growing perceptions of tribal, political and criminal instability would put SA's prospects of hosting the World Cup in further jeopardy. Tenth, this country needs a changing of the guard -- a fresh face, a fresh soul, a fresh voice and a new image. That would send a powerfully evocative message to the world -- a leadership change without a gunshot being fired. Nelson Mandela left us such a wonderful legacy when he stepped down from both the leadership of the ANC and government after one term in office. Two terms as ANC leader must be enough for Mbeki, surely?

Purge of Mbeki Supporters
Jacob Zuma's youth constituency has struck back at its hero's detractors in what might turn out to be the start of "the night of the long knives" as the ANC's succession battle hots up. In dramatic developments the ANCYL and the Young Communist League have separately moved against those perceived to be aligned to President Thabo Mbeki and out of synch with their own positions. The Eastern Cape ANC Youth League paid the price for their position on the president when the national executive committee announced December 15 it had disbanded the league's provincial structure. The Eastern Cape branch had recently come out in strong support of the provincial ANC leadership which urged Mbeki to stand for a third term as ANC president at its regional congress in December. This position contradicts the national ANCYL's view which opposes the creation of two centres of power and wants the future president of the ANC in 2007 to also become the South African head of state in 2009. Meanwhile, the Young Communist League revealed that it has has expelled its deputy national secretary Mazibuko Jara. Senior sources within the organisation said Jara's position was discussed at the YCL's 2nd national congress in Durban. It was decided then to axe him from his position and expel him from the YCL. Jara and the Gauteng provincial executive were earlier suspended for allegedly having differing views on the YCL's firm support for embattled ANC deputy president Jacob Zuma. While the Gauteng provincial body had already been dissolved before the congress. Meanwhile, the ANCYL has also formally postponed its own congress until 2008, confirming speculation that the current executive intends to hold on to power in a bid to influence the ANC policy conference, but more importantly to lobby for a new ANC leader to be elected in December 2007. The ANCYL nationally has made it clear that it supports Zuma to succeed Mbeki. It said there would be "no dark horses" in the election.

ANC Backs Mbeki in Cosatu Row
The African National Congress (ANC) has come to the defence of President Thabo Mbeki, saying the views he expressed in his weekly internet letter were those of the party. This follows the Congress of South African Trade Unions (Cosatu) statement December 10 accusing Mbeki of playing the race card when he wrote that complaints by Cosatu, the South African Communist Party (SACP), the Democratic Alliance (DA) and the Sunday Times about cabinet members having shares fuelled an assumption "that black people are inherently corrupt". The trade union federation said Mbeki's letter had antagonised countless organisations and left the tripartite alliance "fractious and deeply divided". ANC spokesman Smuts Ngonyama said that the assertion that Mbeki's views had divided the alliance was "scurrilous and cannot stand up to honest scrutiny". The responsibility for the state of the alliance had to be borne by all its members, he said. The ANC had also found that the assumption of corruption without supporting evidence -- as Cosatu had done -- was rooted in deep-seated attitudes about race. "The fact that Cosatu's membership is predominantly black does not preclude these attitudes from finding resonance in the public positions of the federation," Ngonyama said. Cosatu said it was angered by the president's use of the race card against it, even though it was mainly a black workers' organisation whose members were also supporters of the ruling party. Mbeki defended cabinet ministers' involvement in the Bombela consortium that won the tender to build the Gautrain, saying the matter had been blown out of proportion. "The Gautrain story confirms the hard reality that as long as the racist conviction that Africans are naturally prone to corruption, venality and mismanagement persists, must we remain on guard to fight the canards that will be peddled, serving as media headlines with greater frequency than summer rains," he wrote. The tripartite alliance's relationship has been through ups and downs, with a variety of economic and developmental policies being introduced by government which alliance members claim happened without their blessing. Cosatu and the SACP have considered leaving the alliance because they believe government's economic policy favours business interests over those of the poor. Ngonyama said Mbeki had been "articulating the views of the organisation", as was his responsibility. He said Mbeki's central point was that organisations had acted publicly on the basis of unfounded, untrue allegations. He said the ANC expected its alliance partners to at least check with the party on the accuracy of newspaper reports before making ill-informed public pronouncements. "The ANC has a responsibility to respond to unfounded attacks on the probity of its leaders from whatever quarter they may emanate," said Ngonyama. The ANC regarded the criticism of Mbeki and the leaders of the ANC as "unfounded, misplaced and regrettable", he said.

Weaker Rand Breathes New Life Into Economy
A weaker rand over the past two months has provided welcome relief to the economy's export sector and lifted business confidence to an 11-year high. The weakening in the local currency to levels close to R8 to the dollar during October and November has offered some relief to manufacturing, the economy's second-largest sector, which contributes just more than 16% to gross domestic product (GDP). The University of Stellenbosch's Bureau for Economic Research (BER) said business confidence in the manufacturing sector had surged during the fourth quarter, rising to 75, its highest level in 11 years, up from 67 in the third quarter. It cited strong growth in domestic sales and a rand weakening to more favourable levels for the sector. The outlook for the sector will, however, largely depend on the local unit, BER economist Christelle Swanepoel said yesterday, after the BER released its fourth-quarter manufacturing business confidence index. "Although manufacturing conditions are rather buoyant, one has to keep in mind that the more favourable level of the rand exchange rate during the survey period may have played an important role. "Furthermore, manufacturing business confidence is still well below that of other sectors, implying room for improvement, in which the future path of the rand exchange rate will play a pivotal role," said Swanepoel. This is backed up by a leading indicator of activity in the manufacturing sector, the Investec purchasing managers index (PMI), which slowed last month as the rand began to strengthen, suggesting that the outlook for the sector remains uncertain. PMI slowed to 55,1 last month, from 59 in October.

U.S. President George Bush and President Mbeki in Discussions
President Bush and President Mbeki met at the White House December 8, to discuss a number of issues of mutual concern to their nations, including the need speedily to address the ongoing humanitarian crisis in the Darfur region of Sudan. At a press conference following the meeting, Bush said he had a "great discussion" with Mbeki over "a wide range of subjects." Describing U.S.-South African relations as "strong and good," Bush said the two talked about South Africa's "commitment to fighting HIV/AIDS and our willingness to provide over $600 million to the folks in South Africa to help deal with this terrible pandemic." On the humanitarian crisis in Darfur, Bush said: "I expressed my concerns about the situation with the president. He shares my concerns that the situation is dire. And now is the time for action." Bush said the two leaders discussed "the need for South Africa and the United States and other nations to work with the Sudanese government to enable a peacekeeping force into that country to facilitate aid and save lives."
The two also discussed Iran and the Middle East, Bush added. On the economic front, Bush said Mbeki was "concerned about whether or not the World Trade Organization [Doha] round will go forward." The Doha Round is a set of negotiations under the World Trade Organization (WTO) process aimed at making trade rules fairer for developing countries. Roadblocks have been thrown up by some countries in the trade organization that are reluctant to open their agricultural markets to African products. Bush said he and Mbeki "recognise that trade will lift more people out of poverty than any other mechanism. And I told the president I am committed to the [Doha] round. I believe in trade. And I believe in the necessity of trade. And so we'll work to see if we can't get that issue solved." Mbeki said, "Of immediate importance to us is the support we get from the president and the U.S. government with regard to the resolution of ... African conflicts." In that regard, he added, "We are, all of us, keenly interested that we must increase the troops deployed in Darfur." Such a deployment is "very urgent, very necessary," said Mbeki. And he pledged, "We will absolutely do everything to make sure that, from the African side, we remove any obstacle there might be to such bigger deployment in Darfur." The impact of the violence in Darfur on neighboring countries, "particularly Chad and the Central African Republic," also came up for discussion, the South African president told journalists. Mbeki said Somalia was also a hot topic in his meeting with Bush, adding that the two leaders are "very keen that, indeed, something must move there." Mbeki pointed out that Somalia is "a failed state" and "a base for terrorists" who could spread out to the rest of the continent. "It's something that is of shared [U.S.-South African] concern," he said. He added that it is "necessary to support the transitional government" on the road to reunifying the country. On the Doha Round, the South African president said he was "very, very reassured" by Bush's expressed commitment to the success of the WTO negotiations. "It's a very important part, in terms of addressing the agenda of the poor of the world. We need these market access issues addressed," Mbeki said.

Reserve Bank Pushes up Interest Rate Again
South Africa's central bank hiked interest rates for the fourth time in six months December 7, increasing the rate at which it lends money to commercial banks to nine percent per annum. In a decision of central importance to the South African economy, the governor of the South African Reserve Bank, Tito Mboweni, announced in Pretoria that the bank's repurchase, or "repo," rate would be increased by 50 basis points, from its current level of 8.5 percent, on Friday December 8. The bank's monetary policy committee (MPC) has decided on a similar increase at every meeting since the middle of this year, taking the rate up from 7 percent since June. The principal objective driving the committee's decisions is to keep South Africa's annual inflation rate at between three and six percent. Through adjustments to the repo rate, it exerts powerful pressure on the interest rates charged by commercial banks to lenders. By pushing up interest rates in recent months, the committee has made it more expensive to borrow money, combating inflation by restricting the growth in the money supply. Mboweni said that although inflation as measured by the CPIX - the consumer price index for metropolitan and other urban areas, excluding the interest cost on mortgage bonds - was running at five per cent in October, this was higher than expected. "Although expectations for all forecast years are within the inflation target range," he said, "the upward trend in expectations observed over the past two quarters is a source of some concern to the MPC." Bank forecasts were that CPIX was expected to exceed six percent in the second quarter of next year, and to average 5.4 percent in 2007 and in 2008. Despite a drop in petrol prices in October, food price inflation was running at 9.4 percent. Meat was 20 percent more expensive than a year ago. If meat was excluded from inflation statistics, CPIX would have dropped to 3.8 percent. The rate increase was widely predicted as the Reserve Bank seeks to balance influences on the South African economy ranging from high levels of consumer confidence, leading to high levels of spending and low levels of saving, to the effects on the oil price of uncertainty in the Middle East and the weakness of the U.S. dollar. The reasons for consumer confidence were illustrated by Mboweni's citation of statistics showing that the South African economy grew at rates of 5.0 and 5.5 percent in the first two quarters of 2006, and 4.7 per cent in the third quarter. He said there were "tentative signs" that South Africans were cutting their spending, suggesting that reduced sales of motor vehicles might be an indication that the bank's increase in rates over the past six months was having the desired effect. Nevertheless, South Africans were still borrowing a lot of money: the growth in total loans and advances to the private sector was running at 26 percent a year, and household debts had risen to 73 percent of disposable income. While oil prices had gone down, they still posed "an upside risk" to the inflation outlook. The exchange rate of the rand against other currencies was showing "a degree of volatility." Part of the recent increase in the value of the rand against the dollar was the dollar's six percent drop against the Euro and the pound sterling.

World Bank Predicts Slower Growth 
Economic growth in SA will slow to 3,6% next year, according to a new World Bank report, but there should be no hard landing. In its Global Economic Prospects 2007, the bank presents a bullish view for globalisation and the world economy, pointing to a rapid expansion of the middle class in the world economy and good prospects for mass alleviation of poverty. The prediction of growth of 3,6% next year is well below the national treasury's forecast of 4,3% presented by Finance Minister Trevor Manuel in the medium-term budget policy statement in October. The treasury's forecast period is March to February and the World Bank's is for the entire calendar year. The World Bank also estimated that the local economy would grow at 4,6% this year, while the treasury estimated in the medium-term budget policy statement that GDP growth would be 4,5%. Reasons for slower growth were weaker domestic demand following interest rate hikes, the weaker rand and higher inflation, the bank said. However, it emphasised that "a hard landing is not anticipated -- in part because the depreciation of the rand should boost output in the export sector". The report said the mining and manufacturing sectors should do particularly well with the weaker rand. It also said growth would be helped by the increase in government infrastructure spending ahead of the 2010 Fifa World Cup. In its forecast for SA, the World Bank also predicted that inflation would rise to more than 6% next year. Reserve Bank governor Tito Mboweni said he expected the Bank's inflation target measure of consumer prices less mortgage increases, CPIX, to exceed the 6% upper level of the inflation target range in the second quarter of 2007. "Thereafter, CPIX inflation is expected to follow a downward path to just above 5% at the end of the forecast period in 2008," he said. The Reserve Bank has raised the repo rate four times this year to 9% to curb a consumer spending spree that threatens to push inflation above the target. The World Bank report also predicted an easing in the second half of the year as weaker private consumption offsets inflationary pressures stemming from higher import costs, a weaker rand, and higher construction costs as infrastructure investment picks up. For the world economy, the Bank predicted average annual growth of 3% to 2030 -- 2,5% for high-income countries and 4,2% for developing countries.

South Africa Fends Off EU Deals for SACU Partners
South Africa is resisting European Union (EU) efforts to treat it differently from its southern African neighbours, a move which could result in the country getting less market access for its exports. This comes after the EU made a proposal that would see the union applying higher tariffs to South African exports compared with those from other Southern African Customs Union (Sacu) members. SA's competitiveness was behind the EU's move to grant the country's exports less market access than its neighbours. "The motivation for the changes stems from the fact that both Sacu and the EU are customs unions. We have been proposing that we should be treated in the same way," said SA's chief trade negotiator, Xavier Carim, December 12. Carim said that in terms of the Trade, Development and Co- operation Agreement (TDCA), the South African-EU free trade agreement, SA treated EU members the same. SA did not, for instance, make a distinction between Germany and France. "So the call for uniform treatment is a principle position," he said. "The EU should treat us as a region but it has established division. Our approach is a move to consolidate the region's trade relations with the EU." The EU has been negotiating an economic partnership agreement with the Southern African Development Community (SADC) since 2004 but SA is not part of the negotiations because of its existing relationship with the EU through the TDCA. The South African-EU trade pact has been in place since 2000. SA's counterparts in Sacu -- Botswana, Namibia, Lesotho and Swaziland -- are involved in the economic partnership agreement negotiations as part of the SADC. The economic partnership agreements are talks between the EU and six African, Caribbean and Pacific (ACP) countries with a view to integrating poorer countries into the global economy. The agreements are due to come into effect by 2008 and are meant to remove trade barriers between the EU and the ACP. Carim said in its push for similar tariffs, SA would guard against compromising the competitiveness of its neighbours' exports, an indication that SA would accept higher tariffs in those circumstances. Trade analyst Hilton Zunckel said : "The problem with the economic partnership agreement negotiations is that SADC is fragmented. SA, therefore, made a proposal to the EU to amend the TDCA and cater for the BNLS (Botswana, Namibia, Lesotho and Swaziland) countries. "It is a dilemma. If SA and the EU cannot resolve the situation, the default is to stay where we are. That means the TDCA stays as it is and Botswana, Namibia, Lesotho and Swaziland negotiate the economic partnership agreement as part of the SADC configuration." Zunckel said it would be cumbersome for these countries to negotiate without SA, their partner in the region's customs union.

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AGRICULTURE

Agriculture Trade Between South Africa and U.S. to Be Enhanced

Agricultural trade between South Africa and the United States of America (US) should improve during the first half of 2007, the Department of Agriculture said December 11. "During the first half of next year, trade in citrus, table grapes, apples and beef between the two countries should be enhanced," the department said in a statement. Agriculture and Land Affairs Minister Lulama Xingwana is in the US holding bilateral trade talks with her counterpart Mike Johanns, amongst others. The US remains South Africa's number one trading partner in terms of total trade, which includes agricultural goods. Total trade is approaching R60 billion with an annual increase of approximately 11 percent, according to the Department of Foreign Affairs said. Ms Xingwana and Mr Johanns have discussed the revival of the South Africa-US Agriculture Working group to promote trade between the two countries. They have also discussed global trade in terms of the World Trade Organisation (WTO) including the US farm Bill 2007 and its impact on the Doha negotiations. Discussions were also held regarding the Agricultural Research Co-operation and a proposal to revive the Professional Development Programme (PDP). The PDP involves the two countries' agriculture departments, the South African Agriculture Research Council and some US universities. The talks further extended to the issues of animal and plant and the Food Safety Inspection Services. "The talks were mostly in a positive spirit, and should lead to better trade and market access between the two countries and the rest of the continent," the department said, adding that it would be possible under the US's African Growth and Opportunity Act (AGOA). AGOA significantly liberalises trade between the US and 37 designated Sub-Saharan African (SSA) countries including South Africa. The Act builds on existing US trade programs by expanding the duty-free benefits previously available only under the Generalised System of Preferences (GSP) program. It originally covered the 8-year period from October 2000 to September 2008, but amendments signed into law by US President George Bush in July 2004 further extended it to 2015. Ms Xingwana also attended a Consultative meeting on International Agricultural Research Business.

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INTERNATIONAL RELATIONS

SA and Australia Boost Co-operation On Climate Change

Environmental Affairs and Tourism Minister Marthinus van Schalkwyk and his Australian counterpart Senator Ian Campbell December 6 signed a letter of intent to co-operate on issues related to climate change. Minister van Schalkwyk said the two countries were facing similar challenges regarding climate change. "South Africa and Australia are at comparable latitude in the Southern hemisphere. Consequently, they similar climatic conditions and similar challenges that emanate from climate change," he said. The two countries, he said, needed to implement policies and measures in the bio-diversity sphere and also in the agricultural sector. He said South Africa and Australia would enrich themselves through their domestic programmes that aimed to adapt to climatic change with a view to conserve bio-diversity and improve food security. According to the Minister, the agreement provides the two countries with expertise to share on greenhouse gas emissions reporting and monitoring. South Africa and Australia have very strong interest in research and development of clean coal technologies. Mr van Schalkwyk further added that co-operation on climate change was in the national interest and would contribute to the achievement of the objectives of the Accelerated and Shared Growth Initiative for South Africa (AsgiSA). AsgiSA aims to achieve 6 percent economic growth by 2010 and halve poverty and unemployment by 2014. In December last year, the two Ministers agreed to explore co-operation of senior officials from the two departments through the exchange of information. South Africa and Australia are also expected to facilitate and encourage participation by business, industry, non-governmental organisations and the scientific communities in bilateral climate change activities. They also agreed to consider other voluntary joint activities in the following areas:
* climate change and adaptation in the agriculture sector;
* climate change and bio-diversity;
* greenhouse gas emissions and monitoring at national levels; and
* exchanging of experiences and lessons learned on climate change policies.
Both departments will establish regular interaction and information exchanges to monitor and review activities under the Letter of Intent. 

South Africa and Czech Republic to Co-operate 

South Africa and the Czech Republic have identified science and education as areas of possible co-operation. This follows bilateral talks between Presidents Thabo Mbeki and his Czech Republic counterpart Vclav Klaus December 12. Presidents Mbeki and Klaus agreed to develop their nation's co-operation in the fields of science, education, trade and investment. "Czech Republic is ready to co-operate with South Africa in an effort to ensure that we exchange our experiences," said President Klaus. He assured South Africans that through the agreements academies of science from the two countries would be able to exchange scientists. He expressed his country's commitment to intensifying trade and investment relations with South Africa. President Klaus added that during the meeting with Mr Mbeki he realised he shared many President Mbeki's views on international politics. President Mbeki welcomed the move to develop linkages in science. "We will also count on the Czech Republic to assist in the critical area of the development of our scientists because the Czech Republic has a lot of capacity in this area," said the Mr Mbeki. The two presidents' main purpose of meeting was to strengthen economic and political relations between their nations. "The two countries have the potential to deepen economic relationship which can help to improve lives of peoples," said President Mbeki. The Czech Republic, President Mbeki said, was a strategic partner because its geographical location gave it access to many European countries. The Czech Republic is located in the heart of Central Europe and its neighbours are Poland, Slovakia, Hungary, Germany and Austria. It also offers easy access to major Central European cities such as Berlin, Bratislava, Budapest, Cracow, Dresden, Munich and Vienna. In addition, it is also one of the newest members of the European Union (EU). President Mbeki said since the EU's European Commission had decided to set up a strategic partnership with South Africa, it was important that South Africa held discussions with individual member-states. "It's important that we intensify our dialogue with individual [EU member states], especially the countries that share South Africa's vision. This will ensure that when European Commission body we would have already held discussions with most countries in the region. "There is great importance for this interaction," explained Mr Mbeki. As part of activities linked to Mr Klaus' visit, business delegations from both countries met scheduled meet to find ways they can increase trade and investment between their countries.

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INTERNATIONAL ECONOMIC RELATIONS

South Africa and Canada Increase Trade

President Mbeki says the continuing growth of trade between South Africa and Canada in various key sectors is encouraging. "We are encouraged by the continuous growth of trade in the areas of mining, health, science and technology and air services," President Mbeki said December 2, hosting Canadian Governor-General Michalle Jean. South Africa is Canada's leading trading partner in Africa. Canadian exports totalled R2.2 million last year, showing strong growth when compared to five years ago, where they stood at R1.5 million. The imports on the other hand totalled R2.4 million, also showing growth when compared to the R1.7 million amount they stood at in 2000. "Bilateral trade [between the two countries] amounts to R4 billion per annum," the Department of Foreign Affairs said. President Mbeki said South Africa was encouraged by the Canadian government's response to the Joint Initiative for Priority Skills Acquisition (JIPSA). JIPSA seeks to source and develop the critical skills required for South Africa to achieve a 6 per cent annual economic growth by 2010 and halve poverty and unemployment by 2014, as outlined by the Accelerated and Shared Growth initiative of South Africa. President Mbeki said the country was pleased bilateral relations continued to gain in strength in the areas of capacity building, the empowerment of women in public service, health, governance, rural development, education, arts and culture as well as sports and recreation. He said it was fitting for Governor-General Jean to visit South Africa at during the world's commemoration of the 16 days of Activism for No Violence Against Women. South Africa has expanded the international campaign to a local version, which also encompasses the protection of children from abuse. "Your own tireless efforts and work to combat domestic violence and abuse against women has set a sterling example for all of us," Mr Mbeki added. "I am confident that you will continue to be a leading advocate as we strive to root out from our societies the cancer of woman and child abuse." Governor-General Jean is on her first state to South Africa, following her appointment to the position last year. The visit comes within the context of South Africa's commitment to consolidate the African agenda through, among other things, the promotion of North-South co-operation through Group of 8 (G8), the Foreign Affairs department said.

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MINERALS AND METALS

Steel Imports Up On High Demand

SA imported 60,9% more steel in the nine months to September than in the corresponding period last year to meet increasing domestic demand as construction projects get under way. Steel sales in the first nine months of the year grew 26,9%, to 4,04-million tons, according to figures released by the South African Steel and Iron Institute (Saisi). Steel sales in the third quarter topped 800000 tons -- the highest level ever -- while steel imports in the quarter were 20,3% higher than in the second quarter, according to statistics released by customs and excise. It was not clear what the proportional split was between direct imports by steel users and producers. Imported carbon and alloy steel products now constitute 8,6% of total consumption, compared to 7% last year, Saisi figures show. While imports are coming off a low base, the current levels of imports were last seen in the 1970s, Saisi said. Also, demand -- and the need to import steel -- are set to soar further as government's infrastructure developments get out of the blocks. SA over the past year has seen steel tariffs and anti-dumping duties abolished. However, Peter Dieterich, secretary-general of Saisi, says the rise in imports was not a function of administrative action taken by government, but was "purely driven by demand". "One may add that the major infrastructure programmes are yet to kick in, so next year is going to be even more exciting," he said. South African exports have been reduced dramatically over the same period, with only a quarter of steel output -- mostly of product not used domestically -- leaving SA and most production routed into the local markets. Producers have been coy about volumes of steel they are importing, but SA's largest producer, Mittal Steel SA, has admitted to importing steel to make up for lost production of 100000 tons after a fire at its Vanderbijlpark plant in October.

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MINING

Gold Fields Closes in On South Deep

Gold producer Gold Fields' $2,5bn, three-step purchase of the rich but problematic South Deep gold mine passed three crucial milestones early December. In the most surprising move of the three, rival Harmony announced it had tendered its 29,2% stake in Western Areas in exchange for Gold Fields shares, which would make it an accounting profit of R299m or R6,65 a share on its 44,98-million Western Areas shares. Harmony CE Bernard Swanepoel said December 3, the group had said consistently that it would have liked cash for its shares because that would have made the decision easier, especially when the Gold Fields share price was under-performing. But in the end the choice was either to hold onto the Western Areas shares, or if to exit, rather to exit through Gold Fields shares, which would be easier than trying to sell Western Areas shares, he said. Holding Western Areas long term was not an option because "we are not investors in other people's dreams". It made sense for Harmony to invest the R2,2bn of value in its own endeavours. The 2,75% stake in Gold Fields was too small to place in the market with a single buyer, he said. Harmony would sell these shares in the market, probably over the next three to 12 months, when the price "is good enough". Gold Fields signalled plans in mid-September to buy out all the other shareholders in South Deep. It agreed to pay $1,5bn in a combination of Gold Fields shares and cash to global gold group Barrick Gold, which owned 50% of the mine. It also said in September it had agreed to buy 27-million shares in Western Areas, whose only major asset is the other 50% of South Deep, from JCI to increase Gold Fields' stake to 34,7%. The agreement included a call option to buy another 9,96-million Western Areas shares from JCI. Gold Fields has now exercised that call option. The final step was a general offer to all the shareholders of Western Areas to swap their shares for Gold Fields' shares. But there has been some speculation about the response of Harmony Gold, which had bought a stake of 29,2%, and acquired a seat on the Western Areas board, earlier this year. Harmony's stake in Western Areas would convert into a 2,75% stake in Gold Fields. Gold Fields and Harmony have an unhappy historic relationship stemming from Harmony's hostile bid for Gold Fields two years ago, which was defeated. Harmony subsequently sold the shares it acquired in Gold Fields. Both groups bid for South Deep, which remains one of the world's biggest and deepest gold ore bodies, although it has been beset by operational problems. Earlier this year a skip accident put the main shaft out of operation for seven to nine months and this was followed more recently by an underground fire. For Harmony, South Deep would have added quality ounces to its reserves, while Gold Fields can accelerate South Deep's later phase of development by accessing the reef through the infrastructure at adjoining Kloof mine. Harmony's initial response to the Gold Fields offer was that a cash offer would have been preferable.

Jubilee Gets $4m Boost From Mitsubishi

Japanese trading house Mitsubishi has injected an initial $4m, which could rise to $16m, into platinum explorer Jubilee Platinum to secure a foothold in Jubilee's developing Tjatje property. Jubilee took a secondary listing on the JSE mid-December. This is the second deal Jubilee has announced. It also recently agreed to raise its stake in the Tjatje project 13% to an effective 48%, with an option to add another 15%. The Tjatje project, which is approaching prefeasibility stage, consists of prospecting rights on three farms on the eastern limb of the Bushveld complex. Exploration to date suggests that the properties contain an inferred resource of about 65-million ounces of platinum group metals and gold. Mitsubishi will invest $16m in three tranches over the next year in zero-interest loan notes, which are convertible into shares in Jubilee's South African subsidiary, Windsor Platinum Investments, to a maximum stake of 20%. If Mitsubishi does not convert the notes into shares within two years from September, the notes will be cancelled. Jubilee CEO Colin Bird said the agreement provided the company with significant funding to advance exploration in SA without diluting shareholders in Jubilee. The agreement also gave Jubilee a partner with size and standing that would be useful in sourcing deals in line with Jubilee's aim of participating in the consolidation of SA's platinum sector. From Mitsubishi's point of view, the corporation would gain an early entry into a company that planned to add more assets. In general, the Japanese appeared to be looking to secure sources of supply of platinum into the future, Bird said.

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