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Books on South Africa
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Update No: 062 - (07/03/07)
Mbeki under attack from the left
President Thabo Mbeki's time in office is drawing to a close. This was
evident from the substance and the tone of his state of the nation address in
Parliament. However, when one throws the presidential succession battle in the
African National Congress (ANC) into the mix, it becomes easier to understand
why his address appeared to lack urgency. What Mbeki promised, with decidedly
less pomp and ceremony than in previous years' state of the nation speeches, was
neither new nor innovative. Mbeki's position as a lame duck president is not
unique. However, unlike his counterparts in the US and the UK, he wants to stay
on as the leader of his party even after he is no longer head of state. No
wonder he treads carefully around the many freeloaders in his cabinet. Mbeki
needs to think carefully about standing against Zuma in a face-off over the ANC
presidency. The risks are many. If Mbeki loses the battle, history will remember
him only for his huge humiliation. The Congress of South African Trade Unions (Cosatu)
and the South African Communist Party (SACP) have expressed disappointment at
President Thabo Mbeki's state of the nation address, saying it fell short of a
comprehensive and coherent development strategy that could address the inherited
structural deficiencies of South Africa's economy. This failure would result in
SA taking a longer time to address unemployment, poverty, inequalities and
social ills such as HIV/AIDS, moral degeneration and crime, Cosatu spokesman
Patrick Craven said February 11. Cosatu and the SACP believe that government's
economic policies are benefiting only a few at the expense of the poor.
The race for the leadership of the Democratic Alliance (DA) is hotting up with
the news that Cape Town mayor Helen Zille has not excluded herself from the
contest. Although a decision on whether she will join the race to replace
current leader Tony Leon is not expected any time soon. Since Athol Trollip
announced his candidacy for the leadership in November, the DA succession issue
has gone quiet, with only his name up on the board. Others, including Zille, are
still considering their options. It is assumed that Zille will not contest for
the national leadership because it would be in conflict with her running Cape
Town, by her own admission a "24 hours-a-day job". It has emerged that
Zille would clearly like to be the national leader if the two jobs could be
combined. The DA was plunged into a succession race late last year when Leon
announced that he would not be seeking re-election when the party convened in
early May for its federal congress.
The ANC defended its controversial Progressive Business Forum (PBF) as a
legitimate political fund-raising exercise, but analysts have questioned the
ethics involved in senior party officials meeting top business figures in return
for money. Richard Calland of the Institute for Democracy in South Africa (Idasa)
estimated that the ruling party had raised as much as R10m from its
controversial scheme to sell the time of cabinet ministers and senior government
officials as part of its fund-raising drive. Calland said by the ANC's own
version that it had 2000 PBF members who paid R3000-R7000, and taking an average
of R5000, it would have raised at least R10m. Calland said the forum was a clear
manifestation that the party had "produced millions of rands in income in
return for selling political capital of government."
Russian Prime Minister Mikhail Fradkov will visit South Africa in March in a
trip intended to confirm relations seven months after President Vladimir Putin's
tour. Fradkov will make just two stops in southern Africa, South Africa and
Angola. Fradkov's foreign tours are much more circumscribed and low profile than
those of the president. This trip seems intended to show the Russian flag in the
region following the recent high-profile shows of official Chinese interest in
Africa.
Manufacturing production growth slowed to 5% year on year in December,
Statistics SA said February 12, but remained strong as a relatively weaker rand
offered some relief to the sector. The rand fell almost 10% against the dollar
last year, helping manufacturers perform better than in previous years. While
the weakening of the rand so far this year (about 4,5%) should assist those
divisions battling to compete against cheaper imports, as well as those
competing on global export markets, the rand is still about 8% firmer than by
early October last year.
Budget Highlights Reflect a Boost to Social Programmes
Government will increase its spending on a variety of programmes in the social
sector including teachers' salaries, health, welfare and public transport, said
Finance Minister Trevor Manuel in his annual budget speech in Parliament
February 21. Highlights in the 2007/08 financial year include - over the next
three years - an extra R8,1 billion for improved teacher salaries, for teacher
assistants and for support staff in schools and districts. This money will be
focused on rewarding good teachers, providing support to poor schools and to
improving the quality of education as a whole. Health also gets a major boost
this year, with an extra R5.3 billion for increased pay for health workers and
for more staff. "Government is budgeting to increase the number of health
workers by about 30 000 over the next five years," says the Finance
Minister. And a further R1.7 billion has been set aside to cover HIV and Aids,
with treatment for about 250 000 HIV-positive patients being rolled out at 272
sites countrywide. The hospital revitalisation programme receives a further R1
billion. For public transport, water and other municipal infrastructure, there
is an additional R7.8 billion. For housing, an additional R2.7 billion will
bring the total allocation for this over the next three years to R32 billion.
The housing budget would have risen to R12.5 billion by 2009/10 from R4.6
billion in 2003/04 - more than doubling over these six years. A further R2.4
billion goes to spending on additional police officers and to invest in new
technology and forensic equipment to assist the police. "Dockets will
become the norm." At the same time, an additional R1.5 billion goes to the
Department of Justice to improving the work of the courts and reduce case
backlogs. Government spending on the 2010 FIFA World Cup goes up to R17.4
billion - the costs of building the stadiums have been contained within the R8.4
billion previously set aside for this but government is adding a further R2.3
billion for related transport infrastructure as well as upgrades of areas around
the 10 World Cup host stadiums. This brings the total to be spent from this
budget on a public transport legacy to R9 billion, leaving the total of direct
government expenditure on 2010 at R17.4 billion. The 2007 Budget brings
increases in social grants for the poorest South Africans, in the wake of
successes in previous years at curbing corruption in the social grants system.
The old age pension, the disability grant and the care dependency grant are all
being increased by R50 - from R820 a month to R870 a month, with effect from
April 1. This increase, says Finance Minister Trevor Manuel, provides "a
strong signal that money released from the reduction of corruption will be given
back to those who deserve it." The Child Support Grant is also being
increased, from R190 to R200 a month, as is the foster care grant, from R590 to
R620 a month. The 2007 Budget also makes R10 billion available over the next
three years to improve the services provided by social welfare organisations in
communities. The budget going to the police will rise by 34 per cent - from R33
billion in 2006/07 to R44 billion in 2009/10, while the Department of Justice
will see a 52 per cent rise in its budget over the next three years. In terms of
so-called "sin taxes" on consumables, a can of beer will cost 5 cents
more, while a packet of cigarettes will cost 60 cents more. A 750 millilitre
bottle of spirits such as whiskey or brandy will cost R1.88 more, while tax on a
750ml bottle of wine goes up by 10 cents. And the tax on a litre of petrol or
diesel will rise by 10 cents from April 4. These increases, says the Finance
Minister, will bring an extra R1.5 billion to national coffers.
Budget Highlights Corporate South Africa Given R2bn Shot in the Arm
Finance Minister Trevor Manuel gave corporate SA a R2bn shot in the arm
February 21, announcing plans to phase out the secondary tax on companies (STC)
and slashing the rate by 2,5 percentage points in the meantime. Tax experts
welcomed the move, arguing that the tax had been seen as raising the cost of
equity financing and was confusing to foreign investors. Government believes
abolishing the tax will contribute to lowering the cost of doing business and
boosting economic growth. Manuel stopped short of reducing the rate of corporate
tax as lobbied for by business, telling a media conference that this would be a
"step too far". Tabling his 2007-08 budget before a joint sitting of
Parliament, Manuel said the rate of the STC would be cut from 12,5% to 10% from
October 1 as the first step towards scrapping it altogether. It will be replaced
with a withholding tax on all dividend distributions at shareholder level from
next year. The other major, and welcomed, tax measure highlighted by Manuel in
his speech was the R3bn abolition of retirement fund tax on rental and interest
income from March. He also announced R8.4bn in personal income tax relief,
mainly to compensate taxpayers for fiscal drag. Most of this tax relief will be
targeted at people earning less than R250 000 a year. Overall, net tax relief
amounted to R12.4bn, which was lower than previous years, but Manuel was
reluctant to pump up consumption and fuel inflation by being overly magnanimous.
He stressed that the abolition of STC was not a prelude to a cut in the
corporate tax rate lobbied for by business. From October, STC will be renamed a
dividend tax and the tax base will be broadened to cover all distributions by
companies and not just those from profits. Next year, the formal legal liability
for dividend tax will be moved from the company paying the dividend to the
shareholder receiving it. Companies would be charged a 10% withholding tax on
dividends, which they would pay on behalf of shareholders. The retirement
industry welcomed Manuel's announcement on retirement tax as it has long fought
for the abolition of the tax on rental and interest income, which it regarded as
a disincentive to save and unfair to individual policyholders. The abolition of
the tax is part of the overhaul of the retirement fund tax regime which will see
a shift towards an expenditure tax model. In terms of this model contributions
to retirement funds will become fully or partially tax deductible, investment
growth within funds will be tax exempt and benefits taxed. The package of
envisaged reforms is due to be finalised this year. National treasury was flush
with funds in formulating the 2007-08 budget as R29.5bn in additional tax
revenue above the original 2006-07 budget estimate flowed into state coffers. It
was thus able to allocate R89.5bn more to government spending over the next
three years as well as providing for a budget surplus of 0.6% in the 2007-08
fiscal year. Non-interest government spending is forecast to grow by a real
annual average of 7.7% over the next three years. In 2007-08 total government
spending of R534bn, or 27.5% of gross domestic product (GDP), is forecast. Total
revenue of R544.6bn (28.1% of GDP) is projected. Government expects economic
growth to remain buoyant, growing at 4.8% in 2007 while CPIX inflation is
expected to average 5.1% and the current account deficit 5.3%.
Police Budget to Increase to R44 Billion By 2010
Government will increase its safety and security budget by 34 percent to R44
billion over the next three years. Presenting his Budget Speech in Parliament
February 21, Finance Minister Trevor Manuel said this would boost government's
drive to increase to 190000 the number of police officers patrolling the
country's streets by 2010. The minister told parliament that financial resources
aimed at fighting crime would rise from R33 billion in the 2006-2007 to R44
billion in the 2009-2010 financial years. Since the 2003-2004 financial year,
the allocations for safety and security had increased by 43 percent. In this
year's budget, Mr Manuel highlighted that an extra R2.4 billion would be
allocated to the South African Police Service so they could increase the number
of police officers while investing in technology and forensic equipment. The
budget would also allow the implementation of the salary upgrade programme that
started in 2005 in the police service. Mr Manuel also noted that there had been
significant increase in resources aimed at fighting crime over the past years.
The government recognised, he said, the seriousness of crime in the country and
would continue to provide leadership in dealing with this issue. "But
effective crime fighting depends on partnerships between our law enforcement
agencies and communities. "Through community police forums, all citizens
have the opportunity to contribute towards making their communities safer,"
said the minister. Mr Manuel said he had instructed the Financial Intelligence
Centre, the Financial Services Board and the South African Revenue Service to
work with the police and prosecutors in dealing with financial crime. "We
must ensure that neither organised crime nor abuse of stewardship obligations
should be allowed to violate our hard-earned democracy and the integrity of our
democracy." The budget for the Department of Justice increased by 41
percent in the past three years and would rise further by 52 percent over the
next three years. "The Department of Justice receives a further R1.5
billion over the next three years to improve court capacity, reduce case
backlogs and modernise the administration of justice," said Mr Manuel.
GDP Increases for the 33rd Successive Quarter
South Africa's GDP has continued with its upswing, registering yet another
increase for the 33rd consecutive quarter since 1998. Figures released by
Statistic South Africa (Stats SA) February 27 show that the real GDP at market
prices rose by an annualised 5.6 percent for the fourth quarter of 2006, far
exceeding expectations. The figure is up from a 4.7 percent revised increase of
the third quarter of the same year. The corresponding real annualised economic
growth rates for the first two quarters of the year were 5 percent and 5.5
percent. Economists had predicted that the figures were going to come in at only
around 4.8 percent. Stats SA said the increase in economic activity for the
period could be attributed to the manufacturing industry (1.4 percent) and the
finance, real estate and business industry (1 percent). Also contributing to the
increase were the wholesale and retail trade, hotels and restaurants industries
(0.8 of a percentage point) and the transport, storage and communication
industry (0.5 of a percentage point). Real value added by non-agricultural
industries increased by 6 percent during the fourth quarter of 2006 while the
year-on-year GDP at market prices rose by 6.1 percent during the same period.
ABSA economist Chris Hart said the real GDP figure came in higher than he
expected. "We had expected a 4.8 percent increase but this rise (5.6
percent) is good for growth going forward. It reflects that the manufacturing
sector responds well to the supply needs of the economy," Mr Hart said.
Another economist and Managing Director of SMM Financial Services Simon Mohapi,
who also expected a 4.8 percent increase, said the rise was a good sign.
"This shows that there is a good support level. It is a promise for people
to get good jobs," he said. - In terms of the Accelerated and Shared Growth
initiative of South Africa, the country aims to achieve 6 percent annual
economic growth between 2010 and 2014.
Pahad Chides U.S. Over 'Volatile Environment'
Deputy Foreign Minister Aziz Pahad suggested February 20 that the US had
created a far more "volatile, dangerous, and unpredictable
environment" in which SA had to carry out its foreign policy. He said SA
had particular concerns about how the global war on terror had become
"unilateralist and militarist". His speech is one of a growing number
of indications of worsening relations between SA and the US over a range of
global issues, including the approach to the war on terror and the Iranian
nuclear programme. In January, in its maiden vote on the United Nations (UN)
Security Council as two-year member, SA sided with veto wielders Russia and
China against a US resolution calling on the military government in Burma to
ease repression. In remarks prepared for delivery to the Western Cape branch of
the South African Institute of International Affairs in Cape Town, Pahad said
the world environment was characterised by the weakening of multilateralism, no
common vision of global security and the disregard for the UN charter and
international law. He said there was also a rejection of international
agreements, anti-Americanism, and a militaristic approach to fighting terrorism.
All of these made it difficult for SA to achieve its three key foreign policy
goals of eradicating global poverty, helping achieve the end of key conflicts,
and dealing with priority issues including terrorism, criminal and drug
syndicates, and climate change, he said. While not mentioning the US, Pahad
said: "Lately there has been an increasing tendency on the part of some
powerful and dominant countries to have determined that the fight against
terrorism should be the global agenda's priority. "While SA supports the
fight against terrorism and proliferation of weapons of mass destruction, we are
concerned at the unilateralist and militarist tendencies in the name of the
global war on terror." Pahad accused the US and Israel of frustrating
efforts towards peace in the Middle East. "Once again it seems that
powerful forces are incapable of grasping an opportunity for peace and stability
and remain committed to negotiating positions that make solutions
impossible," he said.
Pahad Angered by BBC Crime Broadcast
The British Broadcasting Corporation (BBC) has been slammed by a fuming
Deputy Foreign Minister Aziz Pahad after the broadcaster aired a documentary on
crime in SA, broadcast at the time that President Thabo Mbeki made his state of
the nation address. The documentary concluded that SA was the crime capital of
the world. African National Congress (ANC) MP Mike Masutha got the debate
rolling on February 27 with a member's statement in the National Assembly that
said crime statistics showed there had been considerable improvements in the
situation in Hillbrow. He condemned the BBC's programme. Pahad, using the
ministerial slot to comment on members' statements, lashed out, saying that the
BBC report was "selective, one-sided and distorted". One could not
understand how it could have come from an institution with such a good
reputation for fair reporting. He said government had many times acknowledged
that crime was unacceptably high in SA and had consistently made more and more
resources available in the fight against crime. "We need an explanation for
this broadcast," Pahad said. The ANC, on its website, also accused the BBC
of being racist. It also said the SABC could easily go to Britain and do a
similar exposé in parts of London suggesting that Britain was also sinking
under a wave of crime. According to the BBC website, its world news editor, Jon
Williams, responded by saying that the BBC had done similar programmes in south
London on the incidence of gun crime. "But there's no question that crime
is a real issue in SA. John Simpson's report touched a raw nerve - but to liken
the BBC's report to 'the most die-hard racists in the country' is absurd."
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AUTOMOBILES
Toyota Eyes Durban Airport for Growth Plan
Toyota SA had shown interest in using the Durban International Airport site for
its expansion when the new King Shaka airport starts operating in 2009,
eThekwini deputy mayor Logie Naidoo said February 12. But Toyota will have to
battle for the site as other motor component manufacturers and a chemical firm
are also itching to buy it. Naidoo said that Toyota, which operates the biggest
assembly plant in Africa in Prospecton, south of Durban, had indicated it might
purchase the site to create a Toyota City-type complex, similar to that in
Japan, where vehicle assembly and component manufacturing operations are close
by. "The Durban Motor Show in March and the A1 Grand Prix this month help
to build confidence in the city. Durban International's site is flat, serviced
and its new car park has been designed so it can easily convert into
offices," Naidoo said. The airport has recently spent R100m to upgrade is
parking facilities, but it is scheduled to close when the new airport being
built at La Mercy, 30km north of Durban, comes on stream in 2009. Toyota SA
operates on a 79ha site in Prospecton and is nearing the end of an expansion
that will see it produce 940 vehicles a day, or 220000 units a year. Durban
Motor Show manager Phillip Otto said KwaZulu-Natal had become a portal for
automotive imports and exports as well as a significant platform supporting the
growth of SA's automotive sector. He said vehicle sales in the province had been
3,4% above the national average in the past three years, when vehicles sales
nationally reached high levels. Durban's port handled 413617 vehicles last year,
of which 301267 were imports while 112350 were exports. There are more than 50
car component manufacturers in the province. A scattered handful of them
includes aluminium casting manufacturers in Pietermaritzburg, leather and
textile seat-cover makerss in Amanzimtoti, hydraulic cylinder, axle and
specialised mining and industrial vehicle makers in Empangeni and upholstery
firms in Ladysmith. Strategists have suggested that the majority of industrial
production might gravitate towards major ports and away from the traditional
engineering hub of Gauteng over the next few decades as more industries become
integrated in global supply chains.
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ENERGY
Russia Welcome to Tender for Construction of Nuclear Plant
Russia is welcome to participate in the tendering process for the construction
of South Africa's second conventional nuclear energy plant and it has already
indicated its interest in this regard. However, Foreign Affairs Minister
Nkosazana Dlamini Zuma made it clear February 22 that for Russia to participate
in the construction of the new plant it would have to go through the normal
tendering process and that there would be no "head-picking". South
Africa currently has one conventional nuclear station - Koeberg in Western Cape,
which contributes baseload power of about 1800 Mega Watts to the national grid.
Addressing reporters following the two-day SA-Russia Joint Intergovernmental
Committee on Trade and Economic Co-operation, Minister Dlamini Zuma said South
Africa was seeking to expand its use of nuclear energy. Although no agreement
was signed between the two governments, Minister Dlamini Zuma told reporters
that the parties had discussed and agreed to work together in this regard. She
however said the South African mining company Harmony and Russia's Renova signed
an agreement to mine Uranium - a mineral which, when enriched, is used as
nuclear fuel. "As you know we are responsible members of the
Non-Proliferation Treaty (NPT) and we should be assisted [in acquiring nuclear
energy]. "We discussed the matter and Russia is willing to work with us
right though the process from mining to the final stage of nuclear energy,"
said the minister. Russian Minister of Natural Resources Yuri Petrovich Trutnev
expressed his country's willingness and readiness to invest as much as was
needed if it won the tender to build the nuclear station. "It is up to
South Africa if it invites Russia to participate in the building of the nuclear
station. If a decision is taken in this regard we will be ready to
participate," Mr Trutnev emphasised. The ITEC agreed to set up a
sub-committee to deal with cooperation in the peaceful use of nuclear
technology. Meanwhile, the two ministers expressed their satisfaction with the
progress the ITEC had made during the two days. Dr Dlamini Zuma said, while some
agreements had been entered into, more work was being done to formulate legal
framework for cooperation in a wide range of sectors where such legislation did
not exist. Amongst others South Africa and Russia agreed to cooperate in the
exploration and use of outer space for peaceful purposes; various fields of
science and technology; social issues and to enhance trade relations. "We
do all these to improve our economic and trade relations, which in the end
contributes to building a better life for our people," explained minister
Dlamini Zuma.
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FOOD AND DRINK
Famous Brands Bites Off 75 Percent of Wimpy UK
Family restaurant franchise group Famous Brands has acquired a 75% stake in
Wimpy UK for £3m, with an additional £2m to be invested to re-energise the
brand. Wimpy UK is the largest independently owned franchised restaurant chain
in the UK and the owner of the Wimpy trademark in 15 countries in Europe. Famous
Brands chief operating officer Kevin Hedderwick said February 27 that the Wimpy
trademark had been globally fragmented. The acquisition would unite the
trademark in Wimpy's two major markets, SA and the UK, improve the brand in
terms of uniformity and enhance the groups' aspirations to be a global brand.
The 75% stake was bought from Wimpy UK management. The other 25% is held by
Halifax Bank of Scotland. Hedderwick said a £9m debt acquired in Wimpy UK would
not affect Famous Brands' balance sheet. Wimpy UK has 194 outlets across
England, Scotland and Wales, and operates another 20 under a license arrangement
in Ireland. Famous Brands' Wimpy Southern Africa network has 452 restaurants.
Famous Brands has 1281 restaurants under franchise. Its other brands are Steers,
Debonairs Pizza, FishAways, House of Coffees, Brazilian Coffee Shops and Whistle
Stop. Famous Brands group financial director Paris Papageorgiou said the
acquisition would not be earnings enhancing in the short term because of the
investment needed to realign it with the more profitable Wimpy SA model. The
acquisition may take two years to start having a favourable effect on group
earnings. Hedderwick said Wimpy UK was well positioned in a growing market where
there was increasing demand for convenience and casual dining was evolving as a
way of life. Over the medium term the intention was to explore opportunities to
expand the Wimpy brand globally. Opportunities to export Famous Brands'
manufactured products to Wimpy UK would also be investigated. The long-term goal
was to launch a multiple brand offering for Famous Brands globally.
US-SA Wine Joint Venture Starts
The first joint venture in the wine industry between the US and SA was opened by
the US ambassador to SA, Eric M Bost, in Stellenbosch February 26, with about
75% of winery Vilafonté's produce destined for the US market.
The joint venture was started with US investment and was being financed in SA,
Mike Ratcliffe, director of Vilafonté and deputy chairman of the SA Wine
Industry Trust, said. The groundbreaking red wine project was a partnership
between a group of "quality-driven" wine specialist from SA and the
US. Vilafonté is the first winery in SA to be focused on producing wine for the
luxury market. Its annual production is 3000 cases and its wines sell in SA for
R250 a bottle, but could be priced higher in the US, Ratcliffe said. Ratcliffe
cautioned South African vintners not to underestimate the power and significance
of the US market. The fact that the US did not even represent 1% of the South
African export market "shows there is a lot of untapped potential".
"It is not only one of the biggest wine markets in the world, but as a
market placing the emphasis on quality wine instead of quantity, the US offers
successful exporters and high-end brands -- such as Vilafonté - a good
return," he said. This could not be said for overtraded European markets,
"where the mass volume discount culture seems to remain king".
Ratcliffe said that by strengthening the ties between US and South African wine
cultures, both industries would feed off the uniqueness of each other and both.
"Looking at the global wine industry from a macro viewpoint, it is clear
that the international wine industry is in a slump. Global oversupply is growing
at an unprecedented rate and the so-called wine lake continues to deepen.
"The South African wine industry holds an extremely small volume share of
total world wine production. Despite this, the local industry also finds itself
in a position of oversupply symptomatic of low investment levels in
international market development. "A greater marketing focus on the world's
largest economy, with the support of the Africa Growth and Opportunity Act,
should pay handsomely," said Ratcliffe. Bost also announced the formation
of a trust, the US-SA Foundation, based in Washington. The foundation's aim is
to raise awareness of South African wine in the US through integrated
fundraising and promotion. Bost said the annual project would see up to 20 black
wine apprentices spending three months a year in Virginia and California,
working on wine farms and attending classes at vinicultural and viticultural
institutions. So far R4m had been raised and it was hoped that the project would
assist in "expanding the horizons of previously disadvantaged
persons".
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HIV/AIDS
Aids-Orphan Explosion Expected Unless Government Acts
The number of South African children who have lost at least one parent to AIDS
could "explode" to more than 5-million by 2015 unless the government
makes a serious effort to curb the pandemic, the senior programme officer of the
United Nations Children's Fund, Juliana Lindsey, said February 26. She said SA
could reduce the effect of the disease on children with the programmes suggested
in the health department's recently launched National Strategic Plan on HIV/AIDS
for 2007-11. Late last year government launched its 365 Days of Activism for No
Violence Against Women and Children campaign, intended to engender a better co-ordinated
and more comprehensive national response to gender-based violence. About 55000
rapes where reported in the 2005-06 police reporting year and 40% of the victims
were under 18. "I believe SA can cope," said Lindsey. "The
numbers are daunting but, with SA's resources and policies, you can cope."
More than 2-million children in SA have lost a parent to AIDS. This is 16% of
children under 14, Lindsey said. She said orphaned children were particularly
vulnerable to crime. Of the 18500 murders reported to the police in 2005-06, at
least 1000 of the victims were children and it was a reasonable to assume that
most of the remaining 17500 murdered people were parents. SA needed to
"scale up" its child- centred policies in the same way it had improved
the child-support grant over the past 10 years, Lindsey said. The child-support
grant had been introduced with a very low age limit but the government was now
considering offering the grant everyone younger than 18. The grant was
benefiting more than 7-million children. Similarly, programmes such as
community-based home care and no-fee schools should be widened, she said. She
said she was heartened by the extent to which South African society -- "the
grannies and aunties and neighbours" -- went out of its way to help
orphaned children. "I take my hat off to these people. They are trying to
ensure that these children grow to become the backbone of South African
society."
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INTERNATIONAL RELATIONS
Russia Seeks to Improve Trade Relations
Foreign Affairs Minister Nkosazana Dlamini Zuma has urged South Africa and
Russian delegations to come up with ways to improve trade between the two
countries. High ranking delegations from the two countries were locked in a
two-day meeting at the Presidential Guesthouse February 21-22 to discuss
strengthening of their already healthy bilateral political and economic
relations. The meeting forms part of the 6th session of the South Africa -
Russian Federation Joint Intergovernmental Committee on Trade and Economic
Co-operation (ITEC). ITEC is co-chaired by South African Foreign Minister
Nkosazana Dlamini Zuma and the Russian Minister of Natural Resources, Yuri
Petrovich Trutnev. Welcoming the delegation from Russia, Minister Dlamini Zuma
called on the delegations to discuss ways to take trade relations to the same
level as the good political relations that existed between South Africa and
Russia. "We need to see what it is we can do to make sure that our economic
trade and other co-operations match the political cooperation and also match a
number of agreements that were signed between the two countries," Dr
Dlamini Zuma explained. She acknowledged that while a lot of progress had been
made, more work still needed to be done to strengthen bilateral relations
between South Africa and Russia, particularly in the economic field. "We
still need to give a lot of push to the trade-related issues and around May we
are hoping for a South African business delegation to visit Moscow and other
parts of Russia. "Through that visit we hope to consolidate the promotion
of trade and economic development of our countries," she said. The inter-sessional
ITEC meeting which the parties held in July last year, had evaluated the
committee's progress and also mapped out its direction for the rest of the year.
The minister added that the visit in September by Russian President Vladimir
Putin, amongst others, had added more impetus to the relations between the two
countries. A number of agreements, including co-operation in satellite and
space-faring technology were signed during President Putin's visit in Cape Town.
Mr Trutnev reiterated Dr Dlamini Zuma's sentiment that the ITEC needed to
enhance trade between South Africa and Russia, saying trade numbers were very
minimal. He called on the delegations to address any challenges, which existed
that hampered trade relations. "We want to know what is holding back
[trade] between our two countries," said Mr Trutnev.
Switzerland to Collaborate on Global Conflict Resolution
South Africa and Switzerland will collaborate on global conflict resolution, it
emerged following a meeting February 19 between Deputy Foreign Affairs Minister
Aziz Pahad and Swiss counterpart, Michael Ambuhl. Their interaction at the 12th
meeting of the Swiss-South Africa partnership group included discussing a
Memorandum of Understanding to deepen relations between their countries.
"We already co-operate in many areas and now after this meeting we have
worked out how to intensify that joint co-operation, not just bilaterally but in
terms of other countries," the deputy minister said following their
meeting. He added that South Africa would be working closely with the
traditionally neutral European country as both countries sought to play extended
roles in conflict and crisis resolution in third world countries. Minister Pahad
said the Swiss were very involved in conflict resolutions in Africa and the
Middle East, adding that their governments had worked out further co-operation
in Burundi, the Democratic Republic of Congo and in Sudan's Darfur region.
Seeing as the Swiss were already involved in conflict-resolution processes in
many of these countries, the question was how to proceed with a trilateral
arrangement that involved co-operation in settling disputes in troubled
third-party countries or regions, the deputy minister said. "Similarly on
the Middle East, [the issue under discussion was] how can we work together to
see where we can give continuing impetus to the peace process [there]." The
two countries also committed themselves to "staying constantly in touch to
see how we can contribute to finding a solution to the Iranian nuclear
issue." Minister Pahad told BuaNews there was also an "excellent"
exchange of views around reform of the United Nations Security Council.
"Switzerland, whose 500-year history of neutrality as a leading principle
of its foreign policy makes it an attractive point of mediation between parties
involved in various conflicts and sees South Africa as an important "pillar
of stability" in Africa, said Mr Ambuhl. He said the country was taking an
active role as a mediator and facilitator in peace processes in the Sudan and
Africa's Great Lakes region. Other contributions included assistance with
constitutional and security sector reforms, on delivering justice and guarding
against impunity, on free media coverage, free elections and non-proliferation
of small arms and on clearing land mines. Switzerland is one of the biggest
foreign investors in Africa. The European country had also assisted with the
development of a crucial early warning system for the African Union, which
serves to provide timeous alerts on potential and actual outbreaks of conflict,
making it far easier to prevent escalation. Mr Ambuhl said that South Africa,
with whom Switzerland shares a volume of trade equivalent to about R12 billion,
has recently become one of their key strategic partners, alongside the United
States, Russia, China, Japan, India and Brazil. He said he looked forward to the
signing of a Memorandum of Understanding that would underscore stronger mutual
co-operation, which the two countries expect to sign shortly. Another area of
further co-operation would be through the vehicle of the Swiss-South African
Co-operation Initiative "as a unique model for a public-private partnership
with Swiss companies active in South Africa." Switzerland is the
fifth-largest foreign investor in South Africa, he said. Mr Ambuhl added that he
looked forward to even stronger partnership within the framework of the
free-trade agreement between the European Free Trade Association and the
Southern African Customs Union, which only needs to be signed to come into
effect.
South Africa and Iceland to Enhance Trade And Political Cooperation
Foreign Affairs Minister Nkosazana Dlamini Zuma and her Icelandic
counterpart Valgerdur Sverrisdottir have committed their countries to increase
trade levels between their countries. Speaking to the media following their
meeting Fwbruary 27, the ministers committed to strengthening the already
healthy political relations between the two countries. In this regard, Ms
Sverrisdottir opened Iceland's South African Embassy in Pretoria on Monday, a
move Dr Dlamini Zuma welcomed. The Icelandic minister is on her second stop in
Africa after completing a visit to Uganda where she inspected the work of an
Icelandic aid agency there. Upon conclusion of their meeting, ministers Dlamini
Zuma and Sverrisdottir concurred that they had had "constructive and
successful" discussions. Minister Dlamini Zuma said while Iceland was a
small country, its achievements were impressive. "Iceland managed to move
from being one of the poorest countries in Europe to being one of the richest
with a very high standard of living for its people. "So there is quiet a
lot we can learn from Iceland ourselves," Dr Dlamini Zuma said. She said
the two countries were still discussing a number of agreements to improve trade
and political co-operation. These include amongst others an agreement on the
protection of investment, one on double taxation, trade and investment
agreement, aviation agreement. Minister Sverrisdottir explained that the
highlight of her visit to South Africa was opening the new Embassy. "I hope
that this embassy will really strengthen the ties between our countries,"
she said. Ministers Sverrisdottir and Dlamini Zuma expressed their concern at
the low levels of trade between South Africa and Switzerland, the balance of
which is also in favour of South Africa. They explained that theirs was to
create legal frameworks and thus an enabling environment for businesses in the
two countries. They also said they would look at the possibility of co-operation
in the field of clean energy, including hydro- and geothermal energy, amongst
others. Minister Dlamini Zuma also expressed South Africa's support for Iceland
to wish to join the United Nations Security Council (UNSC), saying the two
countries could work together to address situation in Africa as members of the
continental body. Earlier in the day Minister Dlamini Zuma and Argentina's Jorge
Taiana officially opened the two-day South Africa - Argentina Joint Bilateral
agreement. The JBC aims to take bilateral political and economic relations
between the two countries to new heights. An extradition treaty and a bilateral
agreement to co-operate in sport have also been signed.
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MINERALS AND METALS
South Africa and Russia to Team Up On Sales of Uranium
Major uranium producers SA and Russia planned to establish international nuclear
centres to facilitate the sale of uranium to global markets, Minerals and Energy
Minister Buyelwa Sonjica said late-February. Russia was courting SA and other
countries to co-operate on finding new technologies to process uranium to fuel
nuclear power stations, said Sonjica. Government planned to declare uranium a
"strategic mineral" and would start stockpiling the sought-after
nuclear fuel in part to ensure it could power SA's ambitious nuclear expansion
programme. Russia was "looking at SA as a market, but probably we can look
at co-operating with them on beneficiating uranium", Sonjica said.
Government wanted uranium processing to take place in SA as "we want to
have some control over it". SA is the only country in Africa with a nuclear
power plant. Borrowing from the French example, Sonjica said, SA would also look
at recycling and reprocessing spent uranium fuel. "We think it will help us
in terms of ensuring that we have the source for generating nuclear
(power)." French Industry Minister Francois Loos said SA should build a
second conventional nuclear power plant instead of investing in the highly
technological pebble bed modular reactor (PBMR) -- a new nuclear power plant to
be established near the Koeberg plant. Loos said the PBMR project might not
significantly alter SA's inadequate electricity capacity. SA has embarked on a
massive nuclear energy expansion programme, with 24-30 new nuclear plants being
mooted. The entire project is expected to cost R900bn. France has encouraged SA
to embrace conventional "third-generation" nuclear power plants to
expand electricity capacity. French group Areva is bidding to build such a
1300MW plant. Environmental lobby group Earthlife Africa has criticised
government's pursuit of nuclear power stations. The group said the "mutual
back-scratching" between Areva and Eskom seemed to confirm its suspicion
"that the only way to get anybody to invest in the PBMR is to offer a
substantial kickback ... in the form of the purchase of a conventional nuclear
plant from Areva". With Reuters
China 'Undercuts' Steel Sector
Imported Chinese steel is undermining the local steel industry, which needs to
find ways to become more competitive, says Steel and Engineering Industries
Federation of SA (Seifsa) manager Michael McDonald. During a hearing of
Parliament's finance committee, McDonald estimated that imports from China, and
to a lesser extent India, were undercutting South African steel manufacturers'
prices by 15%-50% and in some cases by more. "In a number of instances,
imports from China do not meet local standards and in some cases do not even
meet compulsory safety standards," he said. The clothing and textile
industries also face an onslaught of Chinese imports resulting in the closure of
factories and the loss of thousands of jobs. The situation became so dire that
curbs were imposed on categories of Chinese clothing and textile imports earlier
this year after a deal was struck between the South African and Chinese
governments. The local metal and engineering sectors contribute about 6% to
gross domestic product and generated more than R252bn in turnover last year.
They represent nearly 30% of all local manufacturing in terms of turnover and
employment and employ about 275000 workers. McDonald said that Seifsa had
conducted a survey to determine the extent to which Chinese imports were
undermining the competitiveness of local manufacturing. He said that Seifsa
would use the survey data to support representations to government in a bid
"to find more effective means of assisting our members to become more
competitive and able to survive in what is becoming an increasingly hostile
environment." The industry was also being hobbled by the shortage of
artisans, with the initiative on priority skills acquisition generating more
debate than action. Apprentice training numbers had fallen dramatically over the
years from about 13000 in 1982 to just more than 3400 last year.
Implats Moves On Afplats Deal As Share Soars
IMPALA Platinum (Implats) was forced to push ahead with the announcement of a
R4,2bn takeover of African Platinum (Afplats) last week after rumours in the
market sent shares in the junior platinum group soaring, Afplats CE Roy
Pitchford said February 16. Speaking on Classic Business Day, Pitchford said
they were obliged to give details of the deal in terms of the regulations of the
UK Takeover Panel. Afplats owns the Leeuwkop platinum project near Brits, which
is initially forecast to produce about 300000 ounces of platinum group metals in
concentrate a year for 20 years. Aflplats directors, who were advised by
JPMorgan Cazenove, considered the terms of the offer to be fair and reasonable
and had recommended that shareholders accept it, the groups said. Implats said
it already had irrevocable undertakings from shareholders holding 21,3% of
Afplats shares to accept the offer. "This transaction is complementary to
the strategic partnership agreement entered into with Afplats and represents an
attractive opportunity for Implats to participate in the development of one of
the largest remaining resources in the western limb of the Bushveld igneous
complex," Implats CE David Brown said. The acquisition would help create
sustainable long-term value for the group. In December, Implats agreed to buy
29,9% of Afplats' three South African subsidiaries for just over R1bn.
"This looks like a pretty good deal for Implats," said Andrew Joannou,
portfolio manager at Renaissance Specialist Fund Managers. "It has its
operational risk, but if things go well for them this looks like a pretty good
offer." Joannou said as an exploration project, Afplats carried a certain
amount of risk. Much would also depend on the price of platinum group metals.
However, he said they had been reasonably conservative in their assumptions.
"Nobody knows all the possible failures and risks that can affect a new
project," Joannou said. "I think it's foolhardy to say it's a bargain
for Implats because you are dealing with risk versus return. It's difficult to
assess the risk side of the equation." He said it was positive that Afplats
management had given its endorsement. Impala shareholders would also have to
vote on the transaction. "On the balance of probability, if they can get it
through at 55p, as an Implats shareholder we would probably be positive about
this deal," Joannou said. Pitchford said the offer would remove the
uncertainties inherent in its investment in the Leeuwkop project for
shareholders, who would get a "significant and certain return on their
investment immediately".
Russians 'In Market' for R38bn Anglogold Stake
Mining giant Anglo American is playing its cards close to its chest on rumours
that it plans to sell its 41% of AngloGold Ashanti to Russia's largest gold
company, Polyus - a stake worth R38bn. Although a number of prospective buyers
have already expressed interest, the UK Sunday Times reported February 18 that
Polyus had "approached Anglo American to buy its stake" in AngloGold.
The future of AngloGold Ashanti, the world's largest gold producer behind
Canada's Barrick, remains uncertain after SA's largest company, Anglo American,
said it would sell its gold assets within two years as part of a wider overhaul
that will also see it reduce its interest in paper unit Mondi. The sale of the
AngloGold stake would be one of the largest deals in SA's gold mining history.
Polyus was formed in March with the gold assets of Russia's Norilsk Nickel. It
has some experience with South African gold firms, having previously held 20% of
Gold Fields, which it sold last year for R14bn. The Sunday Times report says
Polyus is eyeing either part or all of Anglo American's 41% interest, which at
AngloGold's current price of R343 a share, would be worth R38bn. Anglo American
predictably would not provide any further information, with spokeswoman Anne
Dunn saying the company "would not comment on speculation" and that
Anglo would have made an announcement if there had been anything to say.
AngloGold was equally tight-lipped, with spokesman Steve Lenahan saying he would
not comment. AngloGold CEO Bobby Godsell, who also sits on Anglo American's
board, said "we would like certainty as soon as possible" around the
Anglo American sale to reassure shareholders -- suggesting that various
discussions are already taking place. But if Polyus is indeed interested, it
remains to be seen whether it will want to buy all of Anglo's 41% interest in
AngloGold, as this would oblige it to make an offer to all AngloGold
shareholders. By June, Polyus had about R11bn ($1,6bn) in cash and another
R8,6bn ($1,2bn) in investments, of which R7bn was being held in bank deposits.
Polyus also had a comparatively small amount of debt on its books, suggesting it
could afford to finance a big acquisition. In September, Polyus set in place a
new development strategy to increase its gold output more than threefold by
2015. It would do this by "boosting production and acquiring new assets and
licences in Russia and internationally, where suitable opportunities
arise". If Polyus were to get its hands on AngloGold, one of the three
largest gold companies in the world alongside Canada's Barrick and the US-based
Newmont, this would help it achieve its goals earlier than expected.
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TELECOMMUNICATIONS
Anglo Signs $450m Deal for Data Services
Mining house Anglo American has awarded a seven-year contract worth $450m for
its global operations to obtain all their voice and data services from
Hewlett-Packard (HP) and BT, formerly British Telecom. The outsourcing deal is
the first win of such a magnitude for the South African branch of BT. BT and HP
will manage Anglo America's data centre operations, voice calls and the computer
systems used by employees in about 18 countries. Ninety staff will transfer to
HP and BT worldwide as their jobs are taken over by those companies. BT's local
branch would grow substantially through the deal, said its regional GM Brian
Armstrong. Although he did not put a figure on the number of staff transferring
locally to join BT SA's existing 75 staff, he said additional recruitment would
also be necessary to handle the workload. Regulatory requirements and Telkom's
de facto monopoly in SA mean BT will rely on Telkom for much of the physical
infrastructure to carry Anglo American's calls. But BT was likely to use the new
operator Neotel for some of the networking infrastructure, Armstrong said. There
will be a two-year transformation project to support Anglo American's quest for
growth and more efficiency by standardising and consolidating its technology
infrastructure globally. . BT has had a presence in SA for 15 years, but it was
relatively low key until now. Its main focus is to handle international voice
and data services for its clients, chiefly multinational groups. Armstrong said
this promised to be a busy year for the local branch. In April it would launch a
corporate social responsibility investment programme, and by the year's end it
hoped to announce a black empowerment deal. Unlike some multinationals, BT would
not seek exemption from equity ownership requirements, as it was willing to
create a joint venture company and sell some shares to black partners. SA is
also high on the list of possible locations for a call centre to handle calls
for BT's operations around the world. If SA is chosen, BT will commission an
existing call centre operator to provide those services. This could create up to
700 jobs.
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