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SOUTH AFRICA


  
  

 

In-depth Business Intelligence

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

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Area (sq.km)
1,219,912

Population
43,586,097

Capital
Pretoria

Currency
rand

President
Thabo Mbeki


Update No: 048 - (01/01/06)

How are the mighty fallen…
2005 saw the strange case of the deputy president of South Africa embroiled in a corrupt arms deal and relieved from his post. Zacob Zuma who enjoys continuing popular public support was seen as the natural successor to President Thabo Mbeki. To many his troubles are viewed as a plot by his enemies in government. Finally Zuma has been charged with rape and has been suspended from his ANC position in a saga, which will continue to dominate headlines in 2006. Away from politics, the economy has remained buoyant, and the stock market broke records weekly. South Africans tend to expect things to go wrong and many find it hard to believe the situation in which South Africa presently finds itself.
Gold prices have reached their highest level in 25 years, buoyed by strong demand as more investors piled into the metal. Gold has risen more than 20% since the beginning of the year. The rally in gold lifted other precious metals, with platinum hitting its highest since March 1980, and silver trading at its best level since May 1987. Gold and platinum account for about 20% of South African exports. Experts do not expect to see any immediate correction in prices as demand continues unabated. 
In 2005 the first nation-wide gold miners' strike in 18 years followed the South African Airways (SAA) strike in July. Both had distinctive features, in terms of the kinds of workers involved and the rhetoric behind the wage demands. It was not only the relationship between profit and pay cited by unions. The relatively new corporate practice of disclosing directors' pay packages has drawn attention to the disparities between raises offered to shop-floor workers and those granted to executives. This gave the unions plenty of ammunition. With rising incomes come expanding needs. In the context of the population as a whole many of the strikers were relatively affluent and middle class. 
2005 saw Barclays pay 33bn rand (£2.9bn; $5.5bn) for Absa, South Africa's biggest retail lender. The deal marked the biggest single foreign investment in South Africa, and made Barclays Africa's largest bank. It should also open up South Africa to further large-scale investments. Barclays had been forced to leave the country in 1986 under pressure from anti-apartheid activists, but re-established a small investment banking presence 10 years ago. 

The Economy: Growth rate heading up
For the first time in years, South Africa's growth rate will exceed its inflation rate. Growth could well come in at 5% for the year, while inflation is expected to average not much more than 4%. This combination has begun to look sustainable, in contrast to the swings and roundabouts of the past. Economic growth is accelerating five years into an upswing, with forecasts for next year running comfortably above 4%. On the inflation side, this year the numbers have kept surprising on the downside, reflecting the extent to which price pressures have been tamed and inflation expectations have become "well anchored". Even high oil prices haven't dented the inflation outlook too much, another break from the past. Corporate earnings have been on an unprecedented upward trend. Though earnings growth for JSE-listed industrial companies has slowed from about 40% at the beginning of the year, it is still running at about 28%. That has underpinned another buoyant year on the JSE, where the all-share index was up 36% for the year to November (after it rose 40% last year), with resources up 59% and industrials up 26%.
The South African consumer market is being driven by a new force, creating the explosion in retail sales, motor vehicles, homes, even investment. It has been called the emerging black middle class, but it has already evolved. It has emerged and it is growing at a rapid pace, underpinning a vibrant economy. Since the onset of democracy in 1994, average black household income has increased substantially. In the apartheid '80s black households' share of total personal disposable income (PDI) was about 30%. By 2003 this had increased to 45%, making the black population the largest contributor to income. Since some 75% of South African households are black, this sector's contribution to total household personal disposable income does not reflect its demographic profile, but this is changing, and will gather momentum as educational standards and skills training improve.
The Reserve Bank's Monetary Policy Committee has decided to leave the repo rate unchanged at 7 percent, leaving interest rates unchanged at 10.5 percent. The repo rate is the rate at which the central bank lends money to commercial banks. Reserve Bank Governor Mboweni said the consumer inflation had remained within the target range of between 3- 6 percent. But due to moderate international oil prices, the MPC forecast consumer inflation to reach 5 percent by the end of 2007.

Old Mutual is expected to win control of Swedish savings group Skandia, bringing to an end a bid that started a year ago and culminated in a tussle with Swedish shareholders and management of the group over the past three months. Old Mutual's R38bn offer to buy Skandia closed at midnight December 16. Analysts expect Old Mutual to achieve at least the 50% minimum acceptance level the group requires to proceed with the transaction. Anything lower and it has said it would walk away. Should Old Mutual be successful, it would take the group a step closer to its goal to be an international financial services group with a strong foothold in three key areas: South Africa, the US and Europe.

Economic operators in the country who wish to trade with the new members of the European Community (EC) will be able to do so from January 2006. Parliament has ratified the Additional Protocol in terms of the SA/European Union Trade, Development and Co-operation Agreement (TDCA). The SA Revenue Service (Sars) is implementing the TDCA in line with the Customs and Excise Act of 1964. The new members that joined the European Union (EU) in May 2004 are Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. SARS spokesperson Donovan Jacobs explained that a legal basis had to be created to extend the TDCA to these countries. This was done through the Additional Protocol to the TDCA. South Africa, the EC, and its member states signed the agreement on October 11 1999. It came into provisional application on 1 January 2000, and became fully effective on 1 May 2004. "The good news is that it [agreement] would be applied retrospectively on goods that have been cleared for customs purposes from 1 May 2004 onwards," said Mr Jacobs. Traders will be able to apply for the benefits of the TDCA from 3 January 2006.
Members of South Africa's economic diaspora are optimistic about the future of their home country and the vast majority plan to return. Research commissioned by the Homecoming Revolution, a non-profit organisation aimed at aiding South Africans living abroad to return home, reveals that 77% still have an investment in the country and 81% wish to live here again. Most said that the country would be better off in 10 years' time and claim to be more positive than five years ago, and 48% described the future of South Africa as "fantastic". The findings will come as good news to the government as it attempts to lure more South Africans abroad to return with their skills. One in three returnees plan to start their own business. A total of 69% said the entrepreneurial climate in the country had improved. The respondents revealed that crime, lack of jobs, a poorer quality of life and affirmative action and BEE policies were still the main push factors preventing some from wanting to return.

First lady blisters government poverty measures
South Africa's First Lady, Zanele Mbeki, has criticised the policies of her husband, President Thabo Mbeki's government. Mrs Mbeki's scathing remarks, which focused on the shortcomings of the government's poverty alleviation initiatives, were published in the December 11 issue of the South African weekly newspaper, the Sunday Times. Sounding more like a member of an opposition party than the wife of the head of state, Mrs Mbeki said there were serious shortcomings in the designing of South Africa's pro-poor policies as well as the delivery mechanisms. She said those working with the poor in post-apartheid South Africa had not received the necessary help from the state to ensure the success of their endeavours She spoke of unfulfilled expectations with respect to legislation, regulations, institutions and micro-finance facilities for the poor. The First Lady, who was speaking during debate on what programme of action South Africans must prepare for presentation to the African Peer Review Mechanism next year.

WTO Compromise With Draft Deal On Subsidies 
World Trade Organisation (WTO) member-states emerged from the sixth ministerial conference in Hong Kong with a disappointing compromise deal that sees the European Union (EU) committed to ending export subsidies by 2013 and the US agreeing to deep cuts in payments to cotton producers. However, the drafts leave the tough negotiations on the details of the agreement for April. The deal represents a marked departure from the hard-line stance that EU trade negotiator Peter Mandelson took earlier in the talks. The EU had until December 18 refused to commit to a date to end the subsidies. Mandelson had said the EU was not prepared to discuss an end to the subsidies unless the US, Australia, Canada and New Zealand made "transparent" commitments to end trade-distorting export support. He said, in the case of US, the trade-distorting support was in the form of food aid and export credits, while the other countries supported their exporting state trading enterprises, which ended up getting bigger market share internationally. "A date on ending export subsidies is not a trade-off for transparent commitments to reform export subsidy programmes," he said. However, Mandelson then described the draft deal as "not enough to make this meeting a true success" but "enough to save it from failure". WTO director-general Pascal Lamy said late that the agreement had put the WTO's long-running Doha round of trade talks back on track. "What you all take back from Hong Kong is a new political energy, a potent fuel to reach cruising speed during 2006." The EU offer, however, falls short of the proposal by the G-20 grouping of developing countries, of which SA is a member that the subsidies end by 2010. The G-20 has accepted the date, despite its preference for an earlier deadline. Speaking on behalf of the group, Brazilian Foreign Minister Celso Amorim said: "I think it is a fair compromise." SA's chief negotiator Xavier Carim said setting a date to end the export subsidies would be an impetus to the negotiations on agriculture, which have largely concentrated on domestic support, export competitiveness and market access. The current round of talks, commonly known as the Doha development round, is scheduled to be wrapped up at the end of next year. Many developing countries have resisted radical action to open up developed markets. While those developing countries higher up the "developed" curve such as Brazil and India are pushing hard for free trade, the poorer countries, particularly some in Africa, are not as keen on the idea. The reason is that they would lose preferential access to markets in the US and EU, and thus face tougher competition. Again, there is a short-term imperative at work here. Long-term benefits of liberalised world trade in the form of increased demand and improved income should far outweigh the short-term pain. But this is as difficult to sell to impoverished African communities as it is to French farmers. If nothing else, the Hong Kong talks left the door open for a renewed push by the WTO to get final agreement on the hard decisions by next year. 

Zuma Charged With Rape
Jacob Zuma was charged with rape December 6 in a case that analysts said all but sank any hope of his becoming the country's next president. "After due consideration for the facts in the relevant case docket, the National Prosecuting Authority has decided that Jacob Zuma be arraigned in the Johannesburg Magistrate's court on a charge of rape," the prosecuting authority said in a statement. The media were forcibly barred from attending when Zuma appeared briefly in the Johannesburg Regional Court in connection with the charge this morning. The former deputy president, showed up along with a large police contingent and a swarm of bodyguards. In addition to the media being barred from the courtroom, there was no sign of a charge sheet against Zuma, nor was there an entry in the court log that he had appeared there. Jacob Zuma has escaped disciplinary action by his own party, but the ANC top brass has decided he should suspend his activities as deputy president, despite his vow to carry on. This follows a meeting of the ANC national working committee December 6, in which Zuma's statement on his role in the party was accepted. But the committee felt he should go a step further on his leadership role as deputy president by effectively taking a leave of absence, senior party members at last night's meeting said afterwards. Zuma announced December 6, soon after appearing in court on a rape charge, that he had voluntarily withdrawn from participation in the national executive committee, the national working committee, meetings of the ANC's top six officials and the national deployment committee, which he chairs.

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AID AGENCIES

Oxfam Says South Africa Has WTO Case

A report released by global development, advocacy and relief organisation Oxfam International December 1 could spur SA into taking legal action against rich countries that subsidise farm products illegally. Legal experts consulted by Oxfam conclude in the report that several countries, including SA, could bring multiple cases against the European Union (EU) and the US -- and win. The report showed SA had legal grounds to drag the EU before the World Trade Organisation (WTO) over illegal subsidies for six products, including citrus juice, wine and butter, Hilton Zunckel of trade consultancy Floor Incorporated said December 1. SA could also take the US to the world trade body for its illegal subsidisation of maize and sorghum, Zunckel said. The Oxfam report said that without subsidies last year alone US corn production would have been down 15%, its exports would have disappeared and world prices would have been 7% higher. "Farmers from the likes of Paraguay, Argentina or SA could have gained an extra $4bn," the report said.
The South African Agricultural Processors Association said that the Oxfam report provided figures confirming some of the industry's suspicions. "The report puts figures to broad notions of unfair trade practices to show the effect of subsidies on developing countries," said the association's international trade adviser, Lambert Botha. But Zunckel said SA, which is one of the developing countries lobbying vociferously for the elimination of farm subsidies in rich industialised countries, could have taken action against illegal subsidies some time ago. A "peace clause" preventing SA and other developing countries' challenging illegal farm subsidies at the WTO expired last year. "SA has been fast asleep by missing these opportunities to date," said Zunckel in a telephone interview from Geneva, where he is accompanying African cotton negotiators. "SA is losing revenue with each export cargo," he said.

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AVIATION

Acsa R2bn Bond Next Year

Airport Company SA (Acsa) said December 8 that it would issue a R2bn bond next year to fund part of its R5.2bn capital investment programme. Acsa chief financial officer Brooks Mparutsa said the company had opted for a bond issue because that was the cheapest method of borrowing money. The airports operator has a low gearing, or total liabilities to assets, ratio, of 7,9%. This enables Acsa to borrow money cheaply from the capital markets. By comparison, utility Transnet has a ratio of 58%. Acsa had initially planned for an R800m bond issue, but Mparutsa said the amount was increased after SA won the right to host the 2010 World Cup tournament. In August, Acsa said it would also introduce above-inflation passenger service charges and aircraft landing fees to help fund its capital expenditure programme. The R5,2bn infrastructure development programme entails upgrades at all 10 Acsa-owned airports in the country. About R4bn would be spend on building new terminals and parking areas in the Johannesburg, Cape Town and Durban airports to cope with the anticipated passenger and aircraft traffic growth during and after 2010 tournament. Acsa MD Monhla Hlahla said that some of the projects that were planned for before SA won the right to host World Cup had been brought forward to ensure that they were completed ahead of the tournament. "In the next two years our airports will be a major hive of activity," Hlahla said.

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BANKING

World Bank Highlights Investment Challenges

An assessment of South Africa's investment climate, jointly conducted by the World Bank and department of trade and industry, has revealed that the business environment is favourable in many ways, yet some challenges remain. 'South Africa: an Assessment of the Investment Climate', released December 13, showed that firms were particularly concerned about labour force skills and education, labour regulation, exchange rate instability and crime. "Although the survey results are by and large very encouraging, there are still a number of issues that have to be addressed," Ritva Reinikka, the World Bank country director for South Africa told IRIN. The 2004 survey among more than 800 firms in four main metropolitan areas was undertaken to identify constraints faced by businesses and compare the "enabling environment" for enterprise to that of South Africa's competitors. Results indicated that wages for managers, professionals and skilled workers were high by international standards, eroding South Africa's competitiveness; exchange rate volatility made exporting difficult, which was critical to achieving desired high growth rates; and the cost of crime, although lower than in the worst performing middle-income economies, was higher in South Africa than in many competitor countries. "Addressing these issues will help towards achieving the target growth rate of six percent per annum to stimulate development and job creation," Reinikka noted. She observed that "based on the enterprise survey, South African workers receive less training than in comparative countries - firms pay a levy for training but fewer firms actually provide training". Tax and finance have usually been major issues in similar surveys, "but these seem to be less important in South Africa. HIV/AIDS is also an issue that firms seem to be moderately concerned about - a reason might be that in a labour-abundant economy people can be replaced, so this does not register on the bottom line", she added. Commenting on the survey findings, Bill Lacey, economic affairs officer at the South African Chamber of Business, told IRIN, "investment in people, in terms of health and education, are a weakness in South Africa; but crime is experienced as a challenge mainly by foreigners, wherever you have poverty, you have crime". Lacey saw government intervention in the labour market as a major obstacle to investment. "Although well intentioned and commendable, these interventions end up hurting the workers themselves and, as a result, businesses tend to prefer capital-intensive production over labour-intensive production." Reinikka also noted that South African enterprise tended to be highly capital intensive. "But with such a large and relatively low skilled labour force it should be more labour intensive, particularly considering the current high level of unemployment in the country." Lacey remarked that South Africa's "arduous regulatory regime" was another challenge. "You have to be quite brave to start a business in South Africa - you have to be a labour lawyer, a tax expert and an accountant wrapped into one. This explains the large size of the grey [informal] economy, because people there don't have to worry about regulations."

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BLACK ECONOMIC EMPOWERMENT

Bafokeng Tribe Buys Implats Stake 

South Africa's Bafokeng tribe is to buy a significant stake in one of the world's largest mineral producers in a major black empowerment deal. The 800-year old tribe, which lives in the North West Province, will control 9% of Implats after the 3.4bn rand ($540m; £304m) deal. The Bafokeng's homeland is rich in platinum reserves, currently being developed under lease by Implats. Under law, firms must give black South Africans a stake in their businesses. By 2016, mining firms must ensure that 26% of their domestic assets are owned by black interests. The Bafokeng has held a small stake in Implats since 1998 when the two resolved a long-standing dispute over the rights to mine reserves on Bafokeng land near Rustenburg. This saw Implats pay the Bafokeng a £45m annual fee for developing the land. The new deal will see the Bafokeng's 300,000 members take a larger stake in the business, giving them input into key management decisions. Implats has also agreed to set aside £30m for economic development of the Bojanala district in North West Province over the next ten years. "This is a watershed transaction for Royal Bafokeng nation," said Chief Kgosi Leruo Molotlegi, the tribe's 36th monarch. "It consolidates our interests in quality mining assets and extends our sphere of influence over the mining activities taking place on our doorstep." Implats, the world's second largest platinum miner, said the deal would deepen its existing relationship with the Bafokeng. "Royal Bafokeng will have direct management involvement in Impala Platinum, focusing particularly on skills transfer and employment equity, and will ultimately benefit from having direct ownership in Implats," Implats chief executive Keith Rumble said. South African companies must comply with laws designed to give the country's historically disadvantaged black majority greater economic power. Implats is following in the footsteps of other companies such as diamond miner De Beers which are giving black-led groups direct ownership and influence in their businesses. In a related transaction, Implats is to sell a 3% stake to 26,000 black employees of its South African subsidiaries. 

Mvela and De Beers Joint Venture

Black empowerment group Mvelaphanda Resources had reached an agreement with global diamond group De Beers, giving Mvela Resources a 51% equity participation in mineral rights formerly owned by the state at Ndowana 2 and De Beers a 49% stake, the companies said December 6. The companies said in a joint announcement that, "on taking a prospective development on land governed by the new agreement to bankable feasibility stage, the partners will discuss in good faith the terms of the marketing of production". Normally, in joint-venture mining arrangements, the majority partner takes a fee for processing or marketing the mineral. With Mvela Resources in a better position to negotiate on these exploration properties, it could insist on selling any diamonds found through Trans Hex, in which it has a fully diluted 20,7% stake, or secure better terms from De Beers. De Beers and Mvela Resources already have a shareholders' agreement covering primary kimberlite exploration in defined areas of Limpopo and Mpumalanga in a project called Ndowana 1 in which Mvela Resources has a one-third interest and De Beers two thirds. Mvela Resources' position on the Ndowana 2 properties was strengthened by the new Minerals and Petroleum Development Act, passed last year, which requires "old order" mining rights to be converted to "new order" rights by complying with certain criteria, including the mining charter. The Ndowana 2 joint venture has been granted new order prospecting permits on two of the previously state-owned properties and exploration work has already begun.

SACP Claims BEE Enriches Elite

SACP general secretary Blade Nzimande, in his political report before the augmented central executive committee meeting, lamented the small number of BEE players who continued to accumulate wealth this year while the living standards of the poor continued to deteriorate. He said there had been a "rather aggressive sponsorship" of certain sections of the emerging black bourgeoisie by big business. "What is noticeable is the fact that these are individuals that are closely associated with the ANC, including those who have served, or still are serving, in the highest levels of its decision-making structures." The SACP argues that the narrowness of black empowerment is not accidental. "It is a deliberate attempt to rapidly create a layer of black bourgeoisie by both the state and incumbent capital," said Nzi mande. He said this had been justified on the grounds of de-racialisation of capital and to create a patriotic middle class. The BEE strategy had been broadened only after "vocal protest by the working class in recent years". "However, there is no clear strategy for broad-based BEE and the codes of conduct still being developed still focus predominantly on ownership by black individuals," he said. The party asked whether the ANC - because of wealth accumulation - was now essentially led by the upper middle class. "What is clear, though, is that these are some of the class forces that are also vying for control of the ANC and transforming it into a vehicle for their own interests. "The existence of a large organised working class and the scale of poverty in the country still force this bourgeoisie to understand that its accumulation of wealth is threatened by the high levels of poverty in our country. "And if it is to capture the ANC, a broad movement principally made up of the workers and the poor, it has to genuflect to the interests of the overwhelming majority of our people," the report says. Nzimande sees BEE as an aggressive sponsorship of certain black sections of the emerging bourgeoisie by various key financial conglomerates of domestic capital. However, the report says that the black bourgeoisie that is being forged is "highly parasitic and dependent on the established white sections of domestic and international capital ". It also points out that another section of the black bourgeoisie is being developed through the parastatal sector. This section is much more dependent on control of some state organs and political connections to the ANC, as shown by the Telkom-Elephant-PIC and Pamodzi-Land Bank deals. All of the above deals involve prominent ANC politicians like ANC head of presidency Smuts Ngonyama, ANC secretary-general Kgalema Motlanthe and the party's local government election organiser, Manne Dipico, the former Northern Cape premier. In an apparent reference to businessmen like Cyril Ramaphosa, Tokyo Sexwale and Mathews Phosa, among others, the SACP warns of a section of frustrated bourgeoisie who have forged relationships and sponsorship with private capital, relatively independent of the state organs. "Critically, this includes prominent individuals who have somehow been alienated from the dominant group within... the ANC." There is thus a co-existence of co-operation at certain levels and mutual suspicion between these two factions, argues the SACP. "One expression of this was the alleged plot against the ANC president [Thabo Mbeki] a few years ago, which also gave us a foretaste of the potential growing relationship between state apparatuses and economic/political interests." The SACP says that, despite all the progressive developments since 1994, the capitalist class remains the ruling class. It concludes that, while the government has embarked on many progressive social policies, the new ruling bloc has tended to prioritise its relationship with capital at the expense of the working class.

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FOOD & DRINK

Winemakers Must Tap Into US Market

South Africa's wine producers should cash in on an increasing US appetite for new wines and wine styles, Rory Callahan of Wines of SA (Wosa), told the marketing organisation's annual general meeting. "There exists an enormous opportunity for South African wine producers," said Callahan, who represents Wosa in the US. The UK was SA's largest overseas market last year, accounting for 46% of exports, followed by the Netherlands (17,4%), Sweden (8,4%), Germany (7,7%) and the US (4%). With wine overtaking beer as the alcoholic beverage of choice in the US, however, there is room for this to grow. Callahan said the US was set to become the world's largest wine market by 2008, with consumption reaching 300-million 9l-cases of wine a year by then. He said only 11% of the US adult wine-drinking population was responsible for the consumption for 88% of all wines, but their increased wine sophistication had fuelled higher spending on wines, which had grown from $14bn in 1999 to $16,8bn last year and was expected to reach $24,2bn by 2008. Callahan said that 30% of that spend would come from imports, where SA had just begun to make its mark. SA's share of New World wines, from countries such as Australia, New Zealand and Chile, sold in the US was 2% last year. Callahan urged local producers to concentrate on a few select US markets as opposed to the entire country, noting that the biggest opportunities for growth lay along the eastern seaboard in states such as New Jersey, New York and Massachusetts, and on the west coast, where Californians had developed a strong wine-drinking culture.

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HIV/AIDS

US Company Expands Access to Aids Drugs

In South Africa, where 6.5 million people are HIV positive and more than 500,000 would benefit from immediate anti-retroviral (ARV) therapy, a U.S. company is using private-sector efficiency and information technology to expand access to the life-saving drugs. BroadReach Healthcare, founded in 2002 to increase access to health care around the world, received $4.1 million in 2005 and will receive a similar amount in 2006 from the U.S. President's Emergency Plan For AIDS Relief (PEPFAR) to implement an innovative large-scale ARV program in South Africa, where 28 percent of the population is affected by HIV/AIDS. (See President Bush's HIV/AIDS Initiatives.) In the company's Cape Town offices, Dr. John Sargent, president and chief operating officer, describes the company's approach to large-scale ARV programs in terms of Henry Ford's first automobile assembly line. "Before Henry Ford came up with the concept of the Model T Ford and the assembly production line," Sargent said, "the automobile industry was a cottage industry. Tons of little shops everywhere were producing automobiles of variable quality at variable costs." Ford took a systems approach, joining operations and protocols with the technology of the day to create a car that could be produced in mass quantities and consistent in quality. That's what BroadReach has done with ARV treatment for AIDS patients, based in part on experience gained in Botswana's national ARV program, Masa. The Botswana program is one of the largest public-sector HIV/AIDS treatment programs in Africa, with nearly 40,000 people now on ARV therapy. In South Africa, BroadReach formed an international joint venture with Cape Town-based Aid for AIDS (AfA), the world's largest HIV/AIDS disease-management company. The joint venture, called ARVCare, is a treatment-management system for HIV/AIDS programs. The system is allowing BroadReach to help South Africa move ARV drug delivery from a cottage industry - most government and private-sector treatment facilities are single hospitals or clinics that can treat 1,000-3,000 patients - to quality-conserving mass production. "We have life-saving technology - ARVs - that can make a difference in people's lives," Sargent said. "The reality is, how do you get them out to 6.5 million people?" Initially, the BroadReach program was what Sargent calls "an emergency stop-gap measure" for people in rural areas who are not being helped by the South African government's HIV/AIDS treatment program. That program faces a variety of challenges across the country: there are not enough trained AIDS doctors, government clinics are too busy or far away, provincial governments have not fully scaled up their programs. To serve rural people better, BroadReach has moved away from a single-clinic model and recruited a network of 4,500 community-based private general practitioners (GPs) and other health care professionals, private laboratories and a national mail-order pharmacy system. The BroadReach program initiated comprehensive doctor and patient education, support and monitoring; and, thanks to PEPFAR funding, delivers ARV drugs, at no charge, to people who need them. Since June, when the company received its 2005 PEPFAR funding, BroadReach has established 27 treatment sites in eight communities across three provinces (Gauteng, KwaZulu-Natal and Mpumalanga). More than 800 patients have been educated, more than 500 have started ARV therapy, and more than 200 program facilitators have been educated in sessions on treatment literacy and ARV-adherence support.

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INTERNATIONAL ECONOMIC RELATIONS

South Africa and Uganda Form Economic Commission

President Mbeki has appealed to the business communities in Uganda and South Africa to support and utilise the new Joint Economic Commission (JEC) to iron out trade bottlenecks between the two countries. Addressing a business forum at the Sheraton Kampala Hotel December 14, Mbeki said there had been mistrust in the trading patterns of the two countries, which needed to be ironed out. Mbeki said he had discussed with President Yoweri Museveni and identified factors that increase the cost of doing business in Uganda. He said the factors are electricity, infrastructure and lack of value addition to commodities. Mbeki said there were many business opportunities in Uganda in agriculture, industries and transport. The chairman of the Private Sector Foundation, James Mulwana, and Uganda Manufacturers Association chairman Abid Alam thanked South Africa for contributing to the commercial sector. Meanwhile, David Muwanga writes that local and foreign investors have welcomed the economic commission. South Africa and Uganda's foreign affairs ministers Lamini Zuma and Sam Kutesa respectively signed the agreement. "Creation of the JEC is good because it will identify problems hindering investment in the two countries," Ivan Kyayonka Shell Uganda's country manager said. Kyayonka said the committee should focus on commercialisation of agriculture and support farmers to access bigger markets. The chairperson of the South Africa-Uganda Business Association, Roy Travers, said part of the problem was that South Africa focuses more on the South African Development Co-operation than the Common Market for Eastern and Southern Africa. Professor Wolfgang Thome, the president of the Uganda Tourism Association, urged the commission to increase the number of flights between Johannesburg and Entebbe.

South Africa and Mozambique Strengthen Ties

South Africa and Mozambique signed an agreement in Mpumalanga December 8, aimed at strengthen co-operation among the two on health issues. Health Minister Manto Tshabalala-Msimang and her Mozambican counterpart Paulo Ivo Garrido signed the agreement in Komatipoort, in Mpumalanga. The signing ceremony follows a state visit by Mozambican President Armando Guebuza to South Africa earlier this year, where he and President Thabo Mbeki identified health as an important area of co-operation to further enhance their relations. Through this agreement, Dr Tshabalala-Msimang and Dr Ivo Garrido will be able to collaborate in terms of resource sharing. The Department of Health says these challenges include the surveillance, control and management of communicable and non-communicable diseases, inadequate human resources and patient referral systems. An example cited is that Mpumalanga, which is geographically located along the border with Mozambique, continuously has to deal with health requirements for patients outside South Africa. "It is for these kinds of challenges that South Africa and Mozambique will enter into a formal Agreement on Health Matters in order to co-ordinate efforts to deal with them," says Dr Tshabalala-Msimang. The agreement, among other things, calls for a co-ordinated patient referral system between the two countries. This proposal takes into consideration the daily movement of people across the border. Patients referred to South Africa by the Republic of Mozambique shall be treated in public hospitals but the latter will bear all costs in this regard, including travelling and accommodation. The ministers are expected to work together to find more effective mechanisms for the prevention of illnesses such as malaria, TB, HIV and AIDS in the general population, especially the migrant labourers in their respective countries. Tonga District Hospital, which is strategically positioned for international cross-border utilisation by the citizens of the neighbouring countries - Mozambique and Swaziland - has been earmarked for referrals from Mozambique. At the moment, the number of patients from Mozambique who attend the hospital cannot be clearly defined because the majority of them present themselves as visitors to relatives, says the Health Department. The signing ceremony took place at Tonga District Hospital near the Komatipoort/ Ressano Garcia Border Posts in Mpumalanga. The ministers also addressed 1000 people from the nearby villages after spraying DDT to prevent Malaria.

South Africa Concludes Meeting With Russia

Foreign Affairs Deputy Minister Sue van der Merwe concluded political and economic discussions with her Russian Federation counterpart, Alexander Saltanov December 8. Briefing the media, Ms Van der Merwe said they discussed consolidating relations with countries of the north in order to further the developmental goals of South Africa. Ms Van der Merwe said they shared ideas on the reform of the United Nations, including its Security Council, and matters of disarmament. "We also had discussion on next year's presidency of G-8, to be held by the Russian Federation, regarding our expectations from them. "We also talked about the Middle East, important work going on there by the Russia Federation. "We briefed him [Mr Saltanov] on Nepad and work done by South Africa in the continent and we were received with appreciation," she said. Russian Deputy Foreign Minister Saltanov said: "We are ready ... [for] practical steps towards enlarging our economies." He said his country was interested in assisting Africa to move towards progressive development, especially in science and technology. Commenting on the Inter-governmental Trade and Economic Committee, the ministers said it was the most important mechanism regulating bilateral political, trade and economic relations between the two countries. Asked if terrorism in the Middle East was a threat to Russia, Mr Saltanov said it was a concern for the international community. "There is no doubt that any terrorist activities are very dangerous, they undermine the rule of law. "The international community should be able to combat it as much as they can. "In order for the international community to combat it, it must allow the political process in the Middle East to continue," said Mr Saltanov. The Russian government is also involved in the implementation of international programmes for strengthening African peacekeeping potential, including training of African peacekeepers, and post-conflict reconstruction programmes. It has continued to offer African states broad preferences in the field of trade and consistently contributed to alleviating Africa's debt burden as part of the initiative for very poor countries with large debts.

Tutu Urges Apartheid Prosecutions

South Africa should have prosecuted the perpetrators of apartheid-era atrocities who did not seek amnesty, Archbishop Desmond Tutu has said. The archbishop was interviewed on South African radio to mark the 10th anniversary of the foundation of the Truth and Reconciliation Commission. The TRC, chaired by Archbishop Tutu, was set up to probe human rights violations under apartheid. Perpetrators had the opportunity to ask for amnesty in return for confessing. "We have probably not done as well in regard to... those who thumbed their noses at the truth commission," the archibishop said. "We probably should have done what the legislation requires and really prosecuted people," he told SABC radio. Out of 7,112 perpetrators who applied, 849 were granted amnesty. President Thabo Mbeki, speaking to mark the Reconciliation Day public holiday December 16, said South Africans of different races had not done enough to overcome the divisions of the past. The TRC spent two years listening to the testimony of more than 20,000 victims and perpetrators at public hearings. However, unknown numbers of people who were responsible for killings, torture and other atrocities never came forward to testify. PW Botha, who was president during the late 1980s when the government was operating death squads and frequently using torture against its opponents, famously refused to co-operate with the TRC and received a suspended prison sentence. 

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TRADE UNIONS

Cosatu Losing Its Way

The Congress of South African Trade Unions celebrated its 20th anniversary early December. Many of its leaders, including those who have jumped ship to become employers and MPs, joined the current crop of activists to fête another milestone in a colourful history that changed the landscape of politics and unionism in South Africa. Cosatu grew from 500,000 members to 1.7 million as it struggled against the determined and ruthless PW Botha regime, and it suffered many deaths at the hands of puppet unions such as the IFP-affiliated United Workers' Union of SA. Cosatu lobbied for a progressive post-apartheid industrial-relations regime with the Labour Relations Act being the first sign of a regime that would be more in favour of the workers, protecting legal strikes and forcing employers to disclose their margins during wage negotiations. Then came the Basic Conditions of Employment Act, which extended cover to domestic and farm workers. And there was the Employment Equity Act to redress apartheid imbalances and make women equals at work. On a political level, Cosatu has stood up to the ANC government when it believed it was being detrimental to its members and South Africa's poor. Ironically, Cosatu has also shown white South Africa what unity can achieve, as can be seen in the marches and militant strategies used by the right-wing Solidarity union. Yet it is this very militant engagement that now threatens to undo the gains Cosatu has won over the years. Many of its affiliates, particularly in education and health, continue to strike unnecessarily.
The federation has also shown gross incompetence in dealing with complex issues of globalisation and has resorted to unnecessary industrial action even when the dice were loaded against its members. The misdirected defence of Jacob Zuma has raised questions about the quality of leadership in the federation. Yet despite these mistakes and setbacks, Cosatu remains the most well-organised formation and the largest representative of workers' interests in the country. It is a leadership factory and has been a bulwark against authoritarian tendencies. It still has a lot to offer South Africa and the continent. As the world joins Cosatu in celebrating its illustrious history, the federation should ask itself whether it is acting in the interests of its members when it defends elements accused of corruption and acts to undermine the institutions of our democracy. The federation should be the last to betray the ideals of those who gathered in Durban on that December day in 1985.

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TRANSPORT

Metrorail Murder Charge

Commuters are charging Metrorail with murder, culpable homicide and serious assault in what could be the country's first "corporate manslaughter" case to be brought against a rail operator. This was confirmed by Danie Dippenaar, counsel for the Rail Commuters Action Group and 49 other plaintiffs in a class action for a court order to force Metrorail to implement "proper operational procedures". They are claiming damages of R40 million for death and personal injury on trains. The rail operator's lawyers have applied to the Cape High Court for leave not to answer to the merits of the case because they allege that the issues have already been decided by the Constitutional Court and there cannot be a re-trial. Metrorail has also filed an application to strike from the summons "certain irrelevant and vexatious" allegations by commuters. Dippenaar said: "Some of the plaintiffs have become most frustrated because they feel their plight is not being heard by the authorities and that civil court processes are open to abuse." "The charges are being brought by relatives of people who have died on trains, and by some who were severely injured as a result of being thrown off trains during robberies, or from falling out of overcrowded coaches because trains were travelling with open doors," said Van Minnen head of the Rail Commuters Action Group Van Minnen's son Juan, then 19, was stabbed to death by robbers on a train. He said the decision to lay criminal charges against Metrorail had been based on the conviction that the rail operator was not serious about running a service free from crime and overcrowded conditions. This was in spite of a Constitutional Court ruling in November 2004 stating that Metrorail was responsible for the safety and security of its passengers. Van Minnen said he had obtained a file of Metrorail's correspondence over 50 years, which revealed that safety standards had been gradually lowered because of cost considerations. He said letters between the operator's senior staff and legal advisers had agreed, for instance, to remove safety lights that warned guards and drivers that doors were open. "All references in the operating instructions to the use and maintenance of these lights were deleted. Eventually all renovated and repaired coaches were returned to use without warning lights." There were also letters expressing "grave concern" about doors opening while the train was moving, and a legal opinion that it was Metrorail's responsibility to take steps to prevent trains from moving while doors were open. Dippenaar said the civil class action had been instituted "because we, the lawyers, believe this is the best legal option to effect substantial change for the better". He said it was possible for firms to be prosecuted and sentenced for such crimes. "It is often referred to as a charge of corporate manslaughter. Human rights should be respected and violators of human rights, be they individuals or corporate bodies, should be held accountable by the rule of law, whether through civil action, criminal prosecution, or both."

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