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Books on South Africa
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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 Václav 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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