FREE GEOPOLITICAL NEWSLETTER

Albania  

For current reports go to EASY FINDER

SOUTH AFRICA


  
  

 

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

Books on South Africa



Update No: 061 - (05/02/07)

The presidential succession race continues and divisions within the African National Congress (ANC) deepen. Recent political scandals may be cutting into support for President Thabo Mbeki and the ruling party. There is growing voter apathy and disillusionment with party politics. This year will see the emergence of various contenders for the presidency. Unlike the orderly handover of power from former President Nelson Mandela to Thabo Mbeki, the current succession debate is likely to be the most contested and divisive in the 95-year history of the ANC and the 13-year history of post-apartheid South Africa. South Africa has an abundance of talented leaders with the potential to be president. Depending on how the presidential succession is handled, it will either unite and strengthen the nation or divide and weaken it. 

The party's policy conference kicks off in July, when fierce debate on economic and social policy is expected. This is likely to be the curtain raiser for the ANC's elective conference in December. While both Presidnet Mbeki and Jacob Zuma have indicated their readiness to "serve" the ANC if the party asks them to, other ANC heavyweights also appear to have thrown their hat into the succession ring. In a rare show of unity, Mbeki and Zuma, appeared together in public January 8 as the ANC marked its 95th anniversary at the party's headquarters. The two men have been at pains to avoid being seen together since the ANC's national general council in August 2005. Away from the festivities a furious row broke out over reports that businessman and former Gauteng premier Tokyo Sexwale had been asked to run for presidency of the ANC. 

South African businessman Tokyo Sexwale has begun campaigning for the leadership of the ANC. The ANC is expected to choose a new leader at the end of this year. Until now, the only visible contender has been Jacob Zuma. The succession is important because whoever takes over will be a front-runner to succeed Mbeki as president in two years' time. According to South Africa's Sunday Times, Tokyo Sexwale is projecting himself as a compromise candidate in what could be a messy succession battle within the ANC. The party has been split between those backing President Mbeki and the supporters of Mr Zuma - who was acquitted after a trial for rape last year, and then had a corruption case against him thrown out of court. Tokyo Sexwale has not been active in politics for nearly 10 years, but is actively campaigning for the ANC presidency, and has had high-level discussions with supporters of both Mr Mbeki and Mr Zuma. Mr Sexwale is believed to be close to the former president, Nelson Mandela. They were imprisoned together on Robben Island, until their release in 1990. Tokyo Sexwale became the Premier of Gauteng Province in 1994, but went into business four years later. He has never ruled out a return to politics, and if the latest press reports are accurate, this marks a major development in the forthcoming ANC leadership contest. In the past month, it has been claimed that Mr Sexwale has been cutting back his business commitments, with a view to mounting a presidential challenge. 

Corruption Concerns
A South African newspaper has published details about an investigation by the UK Serious Fraud Office (SFO) into payments allegedly made by BAE systems. The Mail and Guardian has accused the UK firm of developing "a web of influence" in South Africa regarding an arms deal worth US$4.5bn. In late 1999, South Africa signed a deal to upgrade its armed services. BAE systems says it is co-operating with the investigation, but will not comment on the issues concerned. The South African government said the weapons were needed by the armed forces after an international embargo during the apartheid era. From the first the deal was questioned by anti-arms campaigners. But gradually the concerns moved to parliament, where some MPs alleged that bribes had been paid to secure various contracts. Two South Africans have now been convicted of corruption and have been jailed. A case against the former deputy president Jacob Zuma was withdrawn, but it is still being actively pursued. BAE systems, which secured orders for Hawk trainers and Gripen fighters, has been investigated for the payments it is alleged to have made. The SFO has confirmed that the investigation, which has been under way for over two years, is still active. British Prime Minister Tony Blair previously ordered the SFO to end its investigation of BAE payments to Saudi Arabia, saying that it was not in Britain's national interest. 

Unemployment and Poverty
South Africa is on track to meet its target of halving unemployment and poverty by 2014 if levels of job creation are maintained, President Mbeki said January 14. In a speech to mark the ANC's 95th anniversary celebrations, Mbeki gave an upbeat view of the economy. However, his remarks, which were far more optimistic than his deputy, Phumzile Mlambo-Ngcuka's, own analysis late last year, drew a surprised reaction from ANC alliance partners, the Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP). Many believe economic policy has favoured business over the poor, a debate that is likely to sharpen ahead of the ANC's policy conference in June. While there is broad consensus that unemployment is South Africa's number one challenge, fierce debate over how to grow the economy and create sustainable, quality jobs has led to increasing tensions within the alliance. Government estimates the unemployment rate at 25,6% and wants to reduce it to 15% by 2014. The 25,6% figure does not include people who have stopped actively looking for work. If these people were included, unemployment would be around 40%.

South Africa in the UNSC 
In its maiden vote on the United Nations (UN) Security Council, South Africa came out against a resolution calling on the military government in Burma to ease repression. Voting this way, South Africa emerged looking comfortable with one of the world's most brutal military regimes. It broke ranks with other African nations represented on the council and seemed to put its apparent disdain for US foreign policy before considerations of human rights. In casting this vote, South Africa was the only country to side with China and Russia, who prevented passage with a joint veto under the pretence that it was not a matter that should come before the council. Yvette Mahon, director of the Burma Campaign in the UK, which aims to bring about change and democratic government in Burma, said that the vote had not been simply about Burma, but had been about "China and Russia wanting to give the US a slap in the face". The stance of China and Russia on non-intervention clearly helps protect them from possible resolutions on human rights and international embarrassment. But why did South Africa side with these countries? The best reason may be that, like Russia and China, South Africa wants to stand up against the US in a push for a multipolar world. It hardly matters that the Burma resolution did not pass, as it was expected that either China or Russia would exercise their vetoes. What matters, is that most countries on the council voted for the resolution. Did South Africa make the UN more responsive and effective through its vote? The answer is no. Through its vote, it is on course to earn a reputation among human rights groups as a "friend of torture" that refuses to criticise others for rights abuses. 

Pahad Explains Country's UN Vote on Burma
Following the vote against the UN resolution to ease repression in Burma, Deputy Foreign Minister Aziz Pahad insisted January 17 that SA was "deeply concerned" about human rights in Burma, but wanted to send a message that the resolution "did not fit" with the mandate of the UN Security Council, but was a matter for the UN Human Rights Commission. SA's judgment was at odds with most of the countries on the council. After all, gross violations of human rights are ultimately threats to international peace and security, with armed resistance and refugees often the consequences. Would the African National Congress in exile have made the same argument about a resolution on apartheid SA? What stands out about the voting line-up is that Africa was split three ways, with Ghana voting for the resolution to condemn Burma, Congo abstaining and SA against. What SA's vote screams out is an apparent hostility to anything that may be perceived as intervention in the internal affairs of other countries and against any criticism of countries for rights abuses - which is the Chinese and Russian position. The justification for SA's vote was somewhat lame. SA's ambassador to the UN, Dumisani Khumalo, said the resolution would "compromise the good offices of the (UN) secretary-general". It took years for such a resolution to be proposed and it is likely that UN staff involved with Burma did not think it would compromise their efforts. Passage of the resolution would have shown a unified seriousness of purpose by the international community on Burma. The Burma resolution did not call for any punitive measures, such as sanctions, but for the military, which has ruled the country for 40 years, to end rights abuses and release all political prisoners. The elections in 1990 were won by Aung San Suu Kyi's party but the military disregarded the results and she remains under house arrest. An independent report commissioned by Archbishop Desmond Tutu and former Czech president Vaclav Havel found Burma's military rulers to be a threat to peace. Tutu commented on the UN vote that the real tragedy is that it is so "inconsistent with our history".

New UN Secretary General supports consolidation of African agenda
Foreign Minister Nkosazana Dlamini Zuma expressed satisfaction at United Nations Secretary-General Ban Ki-Moon's support for the consolidation of the African agenda. This followed the minister's first meeting with Mr Ban in New York January 9, since his official assumption of the position of UN Secretary-General. Dr Dlamini Zuma said South Africa was encouraged by the 35th Secretary General's remarks that the consolidation of the African agenda remains one of his priorities in terms of security issues and developmental goals. "We had a very good meeting in which the Secretary-General briefed us about his vision and priorities for the world body including his expectations of responsibilities of member-states," said Dr Dlamini Zuma. Mr Ban reiterated the need for the achievement of the Millennium Developmental Goals. She added that the Secretary-General further briefed the South African delegation on his vision to give a new lease on life into the UN whilst not seeking to bring about drastic changes to the world body. "In this regard, the Secretary-General is soliciting ideas from all members-states including South Africa," the minister said. South Africa committed itself to supporting the process and stands ready to contribute to the melting pot of ideas in this regard. Minister Dlamini Zuma also handed over the chairpersonship of the G77+ China group to Pakistan January 10. She was leading a South African delegation including Foreign Affairs Director-General Dr. Ayanda Ntsaluba, Deputy Director-General George Nene and South Africa's ambassador to the UN, Dumisani Kumalo. The minister had also met with US Secretary of State, Condoleeza Rice in Washington to discuss bilateral political and economic relations.

Zimbabwe : A New "Genocide"?
A vast human cull is under way in Zimbabwe, and many of the deaths are a direct result of deliberate government policies. The horde of painfully thin street children milling around you at traffic lights is almost the least of it: in a population now down to 10-million or less, there are an estimated 1,3-million orphans. Go to one of the overflowing cemeteries in Bulawayo or Beit Bridge and you're struck by the long lines of tiny graves for babies and toddlers. Under the weight of the general economic meltdown - the economy has shrunk 40% since 2000 and is still contracting - the health system has collapsed and a populace, weakened by five years of near-starvation, dies of all sorts of things that would never have been fatal before. For example, a staggering 42000 women died during childbirth last year. The great majority of deaths are a direct result of deliberate government policies. Ignored by the United Nations (UN), it is a genocide already at least 10 times greater than that in Darfur and more than twice as large as Rwanda. Genocide is not a word to use too hastily, but the situation is exactly as described in the UN Convention on Genocide, which defines it as "deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part". Estimating the death toll is difficult. Had demographic growth continued normally, Zimbabwe's population was set to pass 15-million by 2000 and 18-million by the end of last year. But people have fled the country in enormous numbers, with 3-million heading for SA and another 1-million scattered around the world. This would suggest a population of 14-million but even the government, which tries to make light of the issue, says there are only 12-million. Local social scientists say the government's figures are clearly rigged. Their own population estimates vary between 8-million and 11-million. But even if one accepted the government figure, 2-million people are "missing", and the real number is probably 3-million or more. The number is clearly escalating very rapidly now as the cumulative effects of years of malnutrition and abuse take a huge further toll. All this is happening in a country that was, until recently, one of Africa's most prosperous states. This ended after 2000, when President Robert Mugabe first launched the farm invasions and a political terror campaign to combat the rising tide of opposition. Bulawayo, capital of Matabeleland, is a ghost town, its wide and gracious streets sparsely peopled even at midday, for emigration and starvation have drained its lifeblood. Matabeleland - always the centre of opposition to Mugabe - was the first to experience his iron fist in the mid-1980s and has taken more terrible punishment in recent years. In 2005, in common with the rest of the country, it experienced Operation Murambatsvina (Shona for "clean out the shit"), in which the police and army destroyed shanty towns and cracked down on informal traders after Mugabe decreed that they had become rootless and needed to be forcibly re-ruralised in order to regain their peasant roots. About 2- million people were affected. 

The only people brave enough to talk about what is going on preface everything they say with "but you can't quote me". The only exception is Pius Ncube, the Catholic Archbishop of Matabeleland. His outspoken critique of the Mugabe regime has earned him several death threats. Given the terrible death toll all around, when questioned about the infamous statement by Mugabe's henchman (and boss of the secret police), Didymus Mutasa, in 2002 that "we would be better off with only 6-million people, with our own people who support the liberation struggle. We don't want all these extra people." Is this a master plan? Is the government trying to reduce the population? Pius shakes his head slowly. "What is going on is truly evil, but I do not think they set out to kill people, it is just that they do not care. Their only concern is to stay in power and enrich themselves and to turn people into terrified, compliant subjects. The tiny political elite still exudes an enormous self-righteousness and speaks the language of liberation - as if they were the saviours of their people, when in fact they are crucifying them. Despite the horrendous death toll, this is not a genocide like that in Rwanda, where about 900,000 people were butchered in an orgy of tribal hatred. Instead the regime's key motive has simply been its own maintenance in power. From 2000 this led it to destroy commercial agriculture because it saw the white farmers and their workers as major supports for the political opposition to Mugabe. 

Of course, the regime knows that it's hated, that it would never survive a genuinely free election, and so it practises continuous and overwhelming intimidation. This clearly works, as even Mugabe's victims are loath to say anything directly critical of the government. This political death has a ruinous effect on the rural economy, robbing it of productive labour and thus dramatically reducing food security. The government simply ignores all this, blames it on British Prime Minister Tony Blair, or flails madly against reality with the economics of the madhouse. In this, as in the programme for forced re-ruralisation, there are distinct echoes of Cambodia's murderous Khmer Rouge. Yet Zimbabwe doesn't even get on the UN agenda as President Thabo Mbeki, who has covered for Mugabe from the start, uses his leverage in the African group to prevent its discussion. How long this can go on is anyone's guess. After Rwanda the UN vowed "never again", a slogan from the Holocaust, but Mugabe (and, to a considerable extent, Mbeki) have already been responsible for far more deaths than Rwanda suffered and the number is fast heading up into realms previously explored only by Stalin, Mao and Adolf Eichmann.

NPA to Work With UK in BAE Arms Deal Probe
Anti-arms campaigners in South Africa have renewed calls for a "speedy investigation" into a controversial multibillion-dollar defence package that has already claimed a deputy president. The deals date back to 1999, and a contract worth over US$4 billion involving the British arms manufacturer BAE is the latest to come under scrutiny. The company was in the news after senior BAE executives were named as suspects in a government corruption probe in the United Kingdom. Jacob Zuma, then South Africa's deputy president, was dismissed in 2005 after an investigation into the defence package fingered him. Two senior figures in the ruling African National Congress (ANC) have been convicted of corruption and jailed. Six months after the first request, the National Prosecuting Authority (NPA) has agreed to co-operate with the UK Serious Fraud Office's (SFO's) investigation of BAE Systems' involvement in SA's multibillion-rand arms deal. This came just days after mounting political pressure on British Prime Minister Tony Blair to let the probe of BAE's dealings in SA and Tanzania go ahead. An investigation of BAE's dealings with Saudi Arabia was controversially dropped in December, with "national security interests" being cited as the reason. It has been alleged that BAE Systems operated a slush fund to pay members of the Saudi Royal Family. The Saudis had reportedly threatened to cancel arms purchases from the UK if the investigation went ahead. NPA spokesman Makhosini Nkosi said January 19 that "we are in the process of effecting the process" of co-operation with the SFO investigation. However, he would not be drawn on what information the SFO had requested from SA. The SFO is said to be looking into allegations that BAE Systems paid R1bn in commissions to individuals in SA who were in a position to influence the arms package. SA has agreed to buy a package of 24 Hawk fighter trainers and 28 Gripen fighters from BAE Systems. The leader of the UK's Liberal Democrats, Sir Menzies Campbell, insisted that the SFO be allowed to complete its investigation of BAE Systems' dealing with SA. The Organisation for Economic Co-operation and Development added to pressure on the UK government to press ahead with the probe, when its working group on the Anti-Bribery Convention voiced "serious concerns" about the decision to halt the Saudi investigation. Critics of the deal also point out that South Africa did not need the high-tech Hawks or the Gripen fighters, when its foreign policy role is geared more to peacekeeping in Africa. "Not only is there doubt about whether or not the equipment was actually necessary ... this money could have gone towards improving the lives of the poor. Instead, it now lining the pockets of the rich and unscrupulous," said Laura Pollecutt, Executive Member of Ceasefire Campaign, a Johannesburg-based anti-arms lobby group. 

Former ANC Chief Whip Released From Prison 
Former African National Congress (ANC) chief whip and convicted fraudster Tony Yengeni was released from Malmesbury prison mid-January in much the same manner as when he finally reported for incarceration a little over four months ago - carried shoulder-high as if he were a hero. As in so many other areas of the South African discourse, reaction to his release under correctional supervision after serving just one twelfth of the original four-year sentence has fallen into two distinct categories. Yengeni is seen either as a fallen angel whose non-disclosure of a healthy discount on a luxury 4X4 vehicle amounted to little more than a misdemeanour for which he has already been excessively punished. Or he is viewed as a symbol of the corruption and sense of entitlement that has pervaded the ranks of a government that will go to extraordinary lengths to cushion its inner circle from the consequences of their crimes. Certainly, serving just four months of a four-year sentence seems astonishingly lenient, and it would be interesting to hear the opinions of the Pretoria High Court judges who upheld the magistrate's original sentence while berating the state for being soft on corruption involving elected officials. It is admirable that the ANC does not abandon its stalwarts when they stumble, but there is a world of difference between supporting the individual and refusing to acknowledge the gravity of his actions. Yengeni may well have a future within the ANC's structures, but those who are suggesting that he be pardoned and returned to Parliament are sadly misguided.

« Top

AUTOMOBILES

Volvo Signs Huge Trucking Deal


SABOT Management (Sabot) recently placed an order for 201 new Volvo FH13 trucks, making it one of the biggest trucking deals in Africa. Sabot is a subsidiary of the London Stock Exchange's AIM-listed company Camec, a transportation and logistics company servicing southern and central Africa. The total value of the new trucks is estimated at more than R215m. To complement its purchase of the 201 new Volvo trucks, Sabot also placed trailer manufacturer Afrit's biggest order yet of 240 tandem axle flatdeck Superlink trailers valued at a further R60m. The total value of Sabot's fleet of trucks, trailers and tankers is now worth nearly R417m. "We are pleased to have concluded this deal," said Calvin Moonsamy, financial manager at Auto-Sueco, the Volvo distributor in SA. "With the trucks being manufactured in Sweden, our aim as the liaison between Volvo Sweden and Sabot is to ensure that the delivery of the trucks is conducted without any delays. "We are proud to be associated with a company that has the foresight to acknowledge the importance of reinvesting in itself and in Africa." Albert van de Wetering, Afrit's marketing director, says the huge order has accelerated Afrit's introduction of mass production- as well as customised production lines. "(This will) give Afrit a competitive edge and the ability to increase market share. This is the largest order that has ever been placed," he says. Sabot's decision to only use one manufacturer for trucks and trailers means that maintenance will be done at one central point, which means that all parts are standardised. This ensures that time is saved rather than contacting a variety of suppliers. "The reason for this huge investment is to develop strength in the industry and to grow our representation in southern and central Africa," says Adrian Smuts, director of Sabot Management. "The region as a whole is growing, as is the demand for fast and efficient road transportation. We are currently the only haulage company in Africa that is prepared to reinvest in the company. Our mission is to ensure that our customers are confident that they can rely on Sabot's reputation of quality service with a full maintenance back-up system." Sabot plays a major role in its holding company, Camec's mining operations. "It currently takes three months for a train to reach Johannesburg from Lubumbashi and the only economical way to transport infrastructure between the two cities is through a reliable transportation infrastructure," says Smuts. "About 40% of our fleet is dedicated to Camec's mining operations in moving goods back and forth between SA and the Democratic Republic of Congo. From SA, we transport various commodities that are either unavailable or scarce in Congo, such as steel needed for warehousing and housing, mining equipment and machinery, and food products. "We return from Congo and arrive in SA with full loads of Camec's export copper, cobalt and cathode," says Smuts. He says the key to Sabot's success is the ability to carry full loads of cargo to and from SA. "Some of our competitors only carry half loads of cargo, which means that they either have to charge double to compensate for a return trip, or they run at a loss. With our new fleet of trucks and trailers, we are positive that our business will grow even further. This investment is evident that we are here for the long run."

« Top

BANKING

Top Banks No Longer Trust Eskom After Power Cuts

South Africa's major banks have signalled that they can no longer rely on parastatal provider Eskom for electricity after countrywide blackouts in January, and will be implementing measures to guarantee uninterrupted power. One of SA's largest retail banks, First National Bank (FNB), will spend R50m this year alone to buy backup generators and uninterrupted power supply (UPS) units to guard against the adverse effects of power outages similar to those that hit most of the country. The emergency power suppliers would be installed in all FNB branches across the country. UPS units enable a branch to shut down its information technology system without losing any data in the event of a power failure. It takes a generator a few seconds to switch on after an outage, whereas a UPS system switches on immediately. "About R15,5m has already been spent to install the backup system at 63 FNB branches nationwide," said FNB's head of banking infrastructure Kabelo Monchusi. Branches in the Western Cape made of more than half of the recipients due to the province's intermittent power outages. Monchusi aid January 19 that an additional 32 generators, which supply 220kW each, would be deployed from March at a cost of about R8m. "The generators can keep a full-service branch running, including air-conditioning, PCs, servers, routers and ATMs, which consume huge chunks of power supply," he said. The bank would spend R13,5m to install additional UPS units at 270 branches by June this year. More than 200 FNB branches already have a UPS back-up system. Standard Bank has already installed generators in key branches, and would be installing in others throughout the country, particularly in the Western Cape, said Erik Larsen, the bank's manager of external communications. He said that backup power would be put into place at key processing centres to minimise customer disruption. Absa spokesman Errol Smith said the banking group was keeping an eye on the situation, and would install generators in branches if power cuts escalated in Gauteng. Nedbank spokeswoman Cecilia de Almeida said the bank was also looking into the possibility of acquiring additional generators. Meanwhile, power utility Eskom said that it had returned four power stations to stabilise the national grid. "We have been working in partnership with our large industrial customers and municipalities to minimise the impact," Eskom said in its internal memorandum to staff. "Eskom teams have been working continuously to resolve the problems, with some of the (power stations) units in the process of being returned to service." Eskom's MD for transmission Jacob Maroga said that the cause of the widespread blackouts was the "higher than expected demand for electricity" this summer. "The electricity demand is 1000MW higher than planned." The situation was exacerbated by an automatic shutdown of one of the two units at the Koeberg nuclear power station in Cape Town. Maroga said Eskom was experiencing unplanned outages of 4600MW due to technical generating plant problems. The Democratic Alliance said it had written a letter to the National Energy Regulator of SA (Nersa) to investigate the cause of the power outages. An investigation by the energy regulator last year into the six major power outages in Cape Town found negligence, inadequate maintenance and the failure to adhere to licence conditions as the "root causes" of the rolling blackouts. "There was also a trend that indicated ill-discipline in certain areas and non-conformance to procedures (on the part of Eskom's engineers)," Nersa CEO Smunda Mokoena said at the time. Eskom had rejected the energy regulator's findings. If the regulator agrees to investigate again and Eskom is found guilty, Eskom could be fined 10% of its revenue. Based on last year's revenue of R36bn, Eskom could be fined about R3,6bn. The new Electricity Regulation Act of 2006 allows the energy tribunal to impose a 10% fine on the offender's revenue or R2m a day, whichever is higher. Other alternative penalties included imposing a R300m penalty by applying a clawback principle as a punitive measure. Meanwhile, Nersa is yet to announce what penalty would be meted out on Eskom for last year's power outages in Cape Town. However, sources said the claw back principle would be applied, meaning that Eskom could be fined R300m.

EU Bank Commits 900 Euro Million for South Africa

The European Investment Bank (EIB) has committed €900 m - or R8,5bn at current exchange rates - for investment in SA over the next seven years, with the bulk of that money earmarked for infrastructure development. The multibillion-rand commitment by the European Union's development bank is partially in recognition of SA's serious infrastructure backlog and in support of the development aims of the Accelerated and Shared Growth Initiative for SA (Asgi-SA), it said. Just less than 70% of the total will be lent to the public sector and electricity upgrades will take priority. The lending programme is expected to come into force shortly. More funds may be committed later as the EIB is set to review the programme in 2010. Its knock-on effect is also expected to be pronounced, with secondary loans spurred by the EIB's original loans, potentially trebling the investment amount to about R25bn. EIB loans typically tend to be anchor investments and usually serve as a catalyst for private sector investment, said David White, the bank's head of regional representation for southern Africa and the Indian Ocean. On average, the bank finances a third of the investment cost of projects. EIB loans committed to SA since the bank started investing money in SA in 1995 have totalled 1,5bn Euro, and have helped to leverage overall investment of about R42,7bn, the development bank said. Projects for financing will be identified in consultation with the South African government and be based on their development effectiveness and national priority, with water, power supply, sewerage and communication infrastructure the target sectors. Apart from loans to major national infrastructure projects, municipalities also stand to benefit. The EU's commitment of funds was partly in recognition that SA had a serious backlog, said White. It is also in recognition of SA's importance in the region as the EU pushes for improvement of regional infrastructure. This need White described as "absolutely crucial" to bind economies together and drive growth within the Southern African Development Community. SA was the region's "locomotive," and the European Commission's drive for growth in the region would start with the relationship it had with SA, said a European Commission ambassador, who attended the event. Private sector loans will aim to promote private sector growth and could include a number of large projects, aimed specifically at introducing technology upgrades. White, however, would not elaborate on these. 

« Top

FOOD AND DRINK

SABMiller in $320m China Deal

Global brewer SABMiller has further strengthened its commitment to the Chinese beer market, announcing January 4 it would acquire the remaining 38% interest in 14 breweries based in China's Sichuan province. The deal with joint-venture partner China Resources Snow Breweries involves a cash consideration of $320m. As part of the deal, CR Snow will also acquire the rights to the Blue Sword beer trademarks and full ownership of the Guizhou Waterfall Brewery in Guiyang City, which has a capacity of 800000 hectolitres.
The acquisition brings the group's network of breweries across China to 61, including the three greenfield breweries that CR Snow GM Humor Wang announced at the end of last year the group would construct to help with the national roll-out of its largest beer brand, Snow. The construction of the three new breweries is expected to cost $100m. The remaining 62% equity interest in the Sichuan Breweries is already owned by CR Snow after a joint venture was formed in October 2001 between China Resources and the Blue Sword Group. SABMiller entered the Chinese beer market in 1994 through its collaboration with China Resources Enterprises. CR Snow has subsequently become the largest brewer in China, with a 14,9% share of the market. SABMiller Africa and Asia MD Andre Parker said that the acquisition, which is expected to be completed early this year, was part of CR Snow's commitment to invest in prominent local brands to complement the group's national branding strategy and strengthen its position in regional markets. China Resources Enterprise MD Mark Chen said the acquisition would boost the group's operational efficiency in the western and southwestern regions of China. Although beer consumption in China is still relatively small at 23l a head a year compared with other countries in Asia, such as Japan, where it is 50l a head, as living conditions across the country improve with continuing economic development, consumption is expected to increase. Snow became the leading beer brand in China last year, with 7,5% market share. It is the largest brand in SABMiller's portfolio by sales volume, with 17,3-million hectolitres sold in the past year. Annual production capacity at the Sichuan breweries in 2005 was 14-million hectolitres. Construction of additional capacity is under way and would be completed in mid-2008, the group said, and would add a further 1,6-million hectolitres to capacity. For the year ended December 31 2005, net profit at the breweries amounted to $12,4m, up 40% on the previous comparable period.

SABMiller Invests $1,8 Billion in South America

Global Brewer SABMiller said January 17 it would invest more than $1,8bn over five years in its South American operations because of higher-than-expected sales and profit growth potential in the region. The president of SABMiller South America, Barry Smith, said the investment would finance upgrades to the group's brewing capacity, point of sale improvements and new packaging. He said lager volumes in the region had increased 12% for the quarter to December against the previous comparable period, while volumes were up 11% for the year to date, with particularly robust growth in Peru. Total organic lager volumes for the third quarter were up 10%, marginally ahead of growth for the year to date of 9,5%. Smith said a "brand renovation" programme would improve the appeal of the group's beers to a broader base of consumers and across a wider range of drinking occasions. Strong volume growth in the region had prompted SABMiller to invest $175m in a new brewery in Colombia, and $102m in the expansion of facilities in Peru. SABMiller operates in four countries in South America - Colombia, Peru, Ecuador and Panama - and has at least 84% of the beer market in each country. The group's South African operations reported a 1% increase in organic lager volumes for the third quarter, which was in line with year-to-date volume growth. Lager volumes were constrained during the period by stock shortages as a result of temporary disruptions to raw material and glass supplies and disruptions in the national rail transport network. Soft drinks volumes declined by 3% during the quarter as a result of a shortage of carbon dioxide. SAB subsidiary Amalgamated Beverage Industries had to import soft drinks from the UK and Singapore in an attempt to meet demand over the festive season. Because of the shortage, soft drink volumes for the year to date were slightly down on the prior year, SABMiller said. The group's Africa and Asia operations reported organic growth of 30% in lager volumes for the quarter and 25% for the year to date, which it said reflected growth in China of more than 30%. Volumes grew 10% in Africa for the quarter and 7% for the year to date, driven by strong gains in Tanzania, Mozambique and Uganda. Lager volumes in Europe grew 13% for the quarter, bringing year-to-date growth to 9%. Good performances from Poland, Russia and Romania were influenced by an exceptionally mild winter. In North America, Miller's third-quarter domestic sales to retailers were 4,3% above the prior year's but were 2,8% down for the year to date. The group said recovery and raw material costs in the quarter were worse than expected. SABMiller said that despite "headwinds" experienced at Miller and in SA, the group's financial performance for the period was in line with expectations expressed at the time of the interim results announcement last year.

« Top

HIV/AIDS 

Bizarre Genocide Charge for Zackie

A charge of genocide has been laid against Treatment Action Campaign head Zackie Achmat at the International Criminal Court in The Hague, Netherlands, for promoting the provision and use of antiretroviral drugs to treat HIV. This is the latest attack in the long-running battle between the TAC and arch-rivals who vehemently oppose the use of ARVs. The TAC has been at the forefront of the battle to get the government to provide the drugs to HIV-positive people. A 59-page criminal complaint has been laid against Achmat by Cape Town advocate Anthony Brink of the Treatment Information Group (TIG). Brink admits that he gets funding from a foundation set up by controvesial Aids treatment figure Dr Matthias Rath. In documents, he calls on the court to charge and find Achmat "guilty of genocide - the most serious crimes of concern to the international community as a whole". He alleges that Achmat has played a "direct criminal role in the deaths of thousands of South Af-ricans from poisoning from so-called antiretroviral drugs". He said January 11 that "Recent research data cited in the complaint (submitted at The Hague) demonstrates (ARVs) are killing thousands of people in South Africa - mostly black and mostly poor. "TAC leader Zackie Achmat correctly claims personal responsibility for getting these drugs into the public health system, and, accordingly, is personally criminally culpable for the deadly consequences." TAC spokesman Nathan Geffen said: "It's delusional and we don't want to give it any further credibility by commenting further on it." According to the latest available statistics, an estimated 5.5 million people are HIV-positive in South Africa. At least 500 000 of them need to be on ARV treatment.

« Top

MILITARY

Government Ties Up Missile Deal With Brazil for Denel, Armscor

A government-to-government agreement between SA and Brazil has been signed for a joint venture between Armscor, Denel and the Brazilian air force for the development of missiles. The Brazilians have committed $52m to the project, which will be led by Denel in collaboration with its Brazilian counterparts, Denel spokesman Sam Basch said. In total, the project has been estimated to be worth about R300m. In terms of the agreement, Denel will develop its A-Darter short-range air-to-air missile from a prototype to an operational system. Denel has already invested considerable sums in developing the missile prototype but has been constrained by a lack of funding to take it to the next stage. Basch said the agreement, was a further step in intensifying missile co-operation between Denel and the Brazilians, who opted for Denel as its partner because of Denel's proven capability in the missile field. Basch said Denel hoped that other projects would flow from the missile agreement. He said Brazil, for example, would in future require attack helicopters and could be interested in Denel's Rooivalk. Meanwhile, the finalisation of the Turkish government tender for attack helicopters has been postponed for the third time, this time until February. Denel is competing against the deal's other preferred bidder, Agusta Aerospace of Italy, for the estimated $2bn tender. Basch said no reasons were given by the Turkish government for the delay in reaching a decision, though he added that Turkey was known for taking a long time to finalise such matters. Two rival bids, from French Eurocopter Tiger and Russian Kamov KA50-2, were eliminated in the tender. Basch stressed that the delay had no financial or other implications for Denel as the contract had not been built into its budget or its restructuring programme, which is aimed at turning the loss-making arms manufacturer around to profit. Winning the Turkish contract will ensure the survival of the Rooivalk, which has been sold only to the South African Air Force, which bought 12 helicopters in 1999. Since then Denel has not been successful in finding other buyers for the Rooivalk. Denel made a fifth successive loss in its financial year to end March.

« Top

MINERALS AND METALS

South Agrica and China to Benefit From Ferrochrome Duty Cut

South African ferrochrome producers and Chinese steel makers are expected to benefit from the halving of Chinese import duty on ferrochrome purchases, announced last early Jnuary. Ferrochrome is an alloy used to manufacture stainless steel. SA is home to the world's biggest ferrochrome producers: Samancor Chrome, Xstrata/Merafe and Hernic Ferrochrome. There is also substantial investment in new ferrochrome production facilities in SA, including International Ferro Metals' mine and smelter in Mpumalanga and Tata Steel's smelter at Richards Bay. The minerals and energy department last year expressed concern about rising exports of unbeneficiated chrome ore from SA to China as it was encouraging the growth of China's ferrochrome industry at the expense of local manufacturing. Local beneficiation is a key policy objective for the department. Numis Securities analyst John Meyer said in a note to clients the cut in Chinese import duty on ferrochrome to 1% was positive for producers outside China. China has been importing chrome ore for its own ferrochrome industry which is a substantial consumer of energy and emitter of pollutants. IFM deputy CEO Xiaoping Yang said China had levied import duty on ferrochrome for 20 or 30 years and the recent cut was probably in line with the country's aim of meeting environmental requirements for entry to the World Trade Organisation. The effect of the cut on the cost of ferrochrome for Chinese steel makers would be more than 1% as the import duty had been levied on top of VAT. The cut would also help stimulate demand for South African ferrochrome production, Yang said. Merafe Resources finance and new business director Stuart Elliot said the duty reduction would benefit both SA and the global ferrochrome industry. Merafe currently sold most of its ferrochrome to Europe, followed by the Far East and the US, but it had been planning to increase exports to China.

Kumba Options Cost Exxaro Up to R3,8 Billion

EXXARO Resources, the coal and base minerals company spun out of Kumba Resources last year, had exercised its options to take up stakes in minerals sands business Namakwa Sands and zinc and lead company Black Mountain for a total outlay of R2,2bn-R3,8bn, it said January 19. The options were granted to Exxaro Resources at the time of the restructuring and empowerment of Kumba Resources and it said previously it intended to exercise them. Exxaro will pay R2bn in cash for Namakwa Sands, subject to adjustments for items such as capital spending, tax recoupments and working capital, which could bring the price to a maximum of R3,35bn. It will also pay R180m in cash for 26% of Black Mountain, subject to adjustments for working capital and exploration spending, up to a maximum of R450m. Both acquisitions require approval from Exxaro shareholders and the authorities, and are conditional on the operations converting their old order mineral rights to new order rights. An analyst said he was surprised by the extent of possible adjustments to the purchase prices. Although Exxaro Resources' revised listing particulars reflected the minimum cash prices of R2bn and R180m, and said those prices would be adjusted for certain items, it was difficult to see immediately why the potential add-ons were so large. He also expressed some doubt about whether Namakwa Sands was a particularly good asset. At full production, Namakwa Sands is expected to produce 200000 tons a year of titania slag, 120000 tons of pig iron, 25000 tons of rutile and 125000 tons of zircon. According to the competent person's report on Exxaro Resources, prepared by SRK Consulting for the listing, most titanium mineral feedstock is used to make titanium dioxide pigment, the price of which did not justify major greenfields investment.
MINING

De Beers Given Further Angola Concessions

De Beers has been granted additional concessions in Angola from state-owned diamond company Endiama to explore diamonds. "We have been granted access to three additional areas of 3000 km' each, over and above the original concession area in Lund Nord Este," said Gaspar Cardoso, head of De Beers Angola. The South African diamond giant said it was working in partnership and joint management with Endiama to explore diamond deposits totalling an accumulative 12000 km' with rights to the mining phase in the event that kimberlite deposits are found and proven to be economically viable.
Foreign investors developing diamond exploration concessions in Angola are required by law to partner with Endiama. Cardoso said De Beers would possibly enter into further joint ventures with Endiama and other local Angolan partners to get more concession areas. Angola is one of the richest diamond exploration areas in the world and the number five producer by value after Botswana, Russia, SA and Canada. According to WWW International Diamonds Consultants, Angola is expected to produce about 9,1-million carats, or $1,4bn worth, this year and next. Last year, WWW said production totalled around 8,1-million carats, worth $1,3bn. This compares with 6,9-million carats in 2005, or $1,2bn by value. De Beers said it was in discussions regarding the actual details of future marketing arrangements, adding, however, that it would take some time before reaching full production because of technical challenges. Most of the kimberlite deposits De Beers has discovered to date in Angola lie buried by 180m of sterile overburden. "We have a huge technical challenge to resolve before we reach the mining phase and get diamonds out of the ground in an economically viable model," Cardoso said. The company spends $20m a year on exploration in Angola.

Gold Fields On Cue to Acquire, Delist Western Areas

Gold Fields plans to take steps to acquire outstanding Western Areas shares and delist the company after it said January 18 that it had secured more than the minimum acceptances needed in its offer to Western Areas shareholders. With Western Areas under full control of Gold Fields, it will have greater freedom to implement a strategy to increase output and efficiencies at the South Deep mine. Although the offer closes January 26 Gold Fields said it had secured acceptances for 92,5% of the shares affected by its offer and this, together with the shares it already held, meant Gold Fields had a 95,6% interest in Western Areas. It said it intended to invoke section 440 of the Companies Act and would make a further announcement on the process. Section 440 permits the compulsory acquisition of the shares of shareholders who had not accepted the offer, in the event that acceptances were received for 90% of the eligible shares. For technical reasons, Gold Fields had to receive acceptances from 94% of Western Areas' share register to be able to implement section 440. "We are delighted to have reached this significant milestone," said Gold Fields CEO Ian Cockerill in a statement. "Subject to completion of the (section 440 requirements) we can proceed with the full integration of the South Deep gold mine as an operating division of Gold Fields which will result in a simplified management structure for that operation." Western Areas owns 50% of the South Deep mine, which is adjacent to Gold Fields' Kloof mine. Last year Gold Fields announced a $2,5bn acquisition proposal for South Deep, which included a cash and shares offer to Barrick Gold, which owned the other 50% of the mine, and an offer to Western Areas shareholders to exchange their shares for Gold Fields shares. Although there were several potential bidders for the South Deep mine because it represents a huge untapped gold resource, it has suffered from both management issues and technical problems because of its depth. It has been under development for more than 10 years and is still not at full production.

« Top

RETAIL

Five SA Retail Companies in Global Top 250

Five of SA's largest food, general merchandise and fashion retailers rank among the top 250 retailers in the world, according to consulting firm Deloitte Touche Tohmatsu and Stores magazine's 2007 Global Powers of Retailing survey. Pick 'n Pay was the highest-ranked local retailer at 122nd, with $5,5bn worth of sales, up one position from the previous year's survey. The stores were ranked according to their retail sales for the year from July 2005 to June 2006. The food and grocery group was followed by Shoprite in 123rd place and Massmart in 140th place. Metro Cash & Carry, the previous year's highest-ranked South African retailer, fell to 230th from 81st position. Fashion retailer Edcon was a new entrant in 246th position. All five companies that ranked in the top 250 from the Africa and Middle Eastern region were South African groups. This year's list continued to be dominated by US-based Wal-Mart, which reported sales of $315bn during the period. At number two was France's Carrefour with $92,7bn sales. US-based companies dominated, with 93 making it onto the top 250 list, up from 90 last year. These companies accounted for 37,2% of the top 250 retailers, and 45,6% of the top 250 retail sales volumes. The top 10 global retailers ranked in the survey, of which six are American and four European, reported combined sales of $885bn in 2005, or 29,4% of the total top 250 retailers' sales. The positions of the top five global retailers - Wal-Mart, Carrefour, Home Depot, Metro and Tesco -- have remained unchanged for the past two years. Deloitte said consumers spent a total of $3,01-trillion with the top 250 retailers between July 2005 and June last year, or $5,4m every minute. Massmart and Edcon also featured on the list of the 50 fastest-growing retailers in the past five years. Massmart was ranked 15th with a compound annual growth rate of 24,7%, while Edcon was placed as the 32nd fastest-growing retailer in the world with annual growth of 19%. According to the consumer business leader for Deloitte SA, Rodger George, massive demographic shifts in the developing world will produce strong developing economies that are more dynamic than their developed world counterparts, and retailers in these countries are expected to have higher growth rates. Retailers are expected to turn to developing markets for growth, as a result of the limited growth prospects in developed markets. Massmart was also listed as the eighth-largest diversified retailer in the world, placing it among groups such as Sears and the UK's Marks & Spencer.

« Top

TELECOMMUNICATIONS

Telkom Prices Hold SA Back 

Reuters the media and information provider that is one of the 100 largest companies listed on the London Stock Exchange, says Telkom's continued high telecommunications prices and low-quality bandwidth are deterring it from ploughing more money into SA. Reuters and Bloomberg are the two largest global financial information providers, pumping data primarily to banks, traders and governments. But while Reuters has been expanding in countries such as India, CEO Tom Glocer said his company was reluctant to do the same in SA because of Telkom's high prices and poor bandwidth. The statement from Glocer, in an interview during a brief stop in SA, will add to the pressure on government to inject new energy into sluggish efforts to promote telecommunications competition to avoid missing out on foreign investment. This also underlines recent research from economist and telecoms consultant Paul Cole, which showed that local consumers were paying 440 times more than they should for voice and data calls. Glocer said that while Reuters had extensive business interests in Africa and was attracted to SA's sophisticated financial markets, telecoms services "are far more expensive here, and the available bandwidth is flaky". Glocer said if this issue was addressed, it would precipitate far greater investment from Reuters in SA. He said the high cost of telecommunications was an issue that "has to be solved if SA wants to create an economy that is growing". Reuters does not disclose separate investment details of its South African business, but it employs about 100 people in SA and last year experienced 15% growth in revenue across Africa. Glocer said that while SA had many advantages over other emerging markets, including its stronger infrastructure, a well-run economy and sophisticated financial markets, the telecommunications costs remained a glaring weakness. Telkom has denied its costs are prohibitive and January 16it reiterated that it was "committed to the process of consistently adjusting its pricing model in order to make telecommunications more affordable and accessible to business as well as the broader South African public". But Glocer said that unlike in the rest of the world, SA's telecoms costs for running Reuters' products and information terminals dwarfed the cost of the product itself. "Where the communication line is more expensive than the product itself, this makes the service prohibitive. Here, certain services are beyond the price point of the buyer," he said. Compounding the problem, Glocer said, was that the quality of bandwidth Telkom was able to offer did not measure up to that in certain other emerging markets. He said call centre jobs that could have been SA's had already been lost because of this. Glocer's comments add to complaints from other groups. Last year, the South Africa Contact Centre Community told Parliament that SA could potentially lose 100000 new call centre jobs because of high telecoms costs, as global call centre companies chose to operate in countries where costs were lower, such as India and the Philippines. Eighteen months ago, international telecommunications group AT&T said it did not plan to increase its South African investment because of high costs, primarily in telecommunications. AT&T said that while it used Telkom for 2% of its local business, this represented 25% of its total business costs in SA. President Thabo Mbeki has also repeatedly highlighted the high costs of telecoms in SA. Reuters chairman Niall FitzGerald is a member of Mbeki's International Investment Advisory Council.

Telkom Bid 'Beneficial' to Small Firms

The controversial bid for Telkom to acquire Business Connexion should be approved as it will increase the reach and affordability of telecoms services for the masses, an enquiry into the takeover will be told. The R2,4bn deal has been widely slated by rival companies, which fear Telkom will gain an even greater monopoly over the market. But the SMME Forum, a body representing small businesses, believes small firms would benefit from more services at lower prices. The forum will present supporting documents to the Competition Tribunal in January and hopes to present oral evidence when public hearings begin on March 12. "I don't expect our position to find favour with everybody in the industry, but people are opposing the deal without thinking through its merits because historically they don't like Telkom," said the forum's president, Tebogo Khaas. "Our submission focuses purely on the public interest. The deal would get services to people Telkom has never served before and at a more affordable rate." Heavyweight opponents to the deal include Internet Solutions and the Internet Service Providers' Association, representing more than 100 internet players. The forum will argue that telecoms and technology services are essential for small businesses, and that Telkom by itself has neither the skills nor the capacity to provide a full range of services to every region. If the acquisition was allowed, Telkom's connectivity could be augmented by software on demand, networking and software support and customer relationship management services from Business Connexion. "Small businesses would be offered services previously reserved for big companies," said Khaas. "Small businesses can benefit immensely from access to technology and Telkom hasn't been able to achieve that. With Business Connexion it could provide much more reach and much more affordable services." Other industry players are not objecting to Telkom building up additional technology skills by itself, but to its bid to take over an existing company. But Telkom and Business Connexion do not offer the same services, so the move would not reduce the amount of competition in the market, the forum argues. If Telkom had to build up its technology services in-house, the result would be the same but small businesses would wait far longer to benefit, the forum says. The forum was now calculating how much the combined entity would be likely to grow the telecoms market for all players, and the extent to which small firms with more access to hi-tech services could create more jobs, Khaas said. Telkom has bid R9,25 a share, and with Business Connexion shares trading at just R7,65 as the case drags on, its shareholders are keen to win approval. The Internet Service Providers' Association will oppose the deal, claiming that Telkom has a reputation for illegally cross-subsidising its offerings and could extend that if it gained additional services from Business Connexion. The companies will review their planned tie-up by March 15. By that time they expect to have a clearer idea of the strength of the opposition and an idea of whether the tribunal is likely to grant approval.

« Top

WORLD TRADE TALKS

South Africa Facing a Critical Year Over World Trade Talks

The trade and industry department says this will be a critical year for SA's trade negotiations in the international arena, marking out the country's parameters in international trade relations. Deputy Minister of Trade and Industry Rob Davies said January 4, these parameters would be determined by the outcome of talks on three trade treaties. This involves the possible revival of the collapsed Doha round of World Trade Organisation (WTO) talks; the further economic integration of the Southern African Development Community (SADC); and the economic partnership talks between the European Union (EU) and several southern African states. Davies said WTO director-general Pascal Lamy was trying to revive the Doha talks. However, Lamy had conceded that there was not much optimism about the success of the project. Talks on the issue would take place on the fringes of the World Economic Forum in Davos. "In three months we will know whether the negotiations will proceed or whether they will go into hibernation until after the next US presidential elections at the end of 2008," Davies said. "The ball is now in the court of the US administration as to whether they can come up with a better offer on agricultural support," he said. On economic integration of the SADC, Davies said the critical question for negotiators this year was whether the integration should proceed on the basis of a negotiated external tariff common for all member countries, or whether it would target a free trade area internally but with each country having its own external tariff system. If the latter option was chosen, the economic system would be built on the foundations of the existing Southern African Customs Union. A decision on the way forward would have to be taken this year, Davies said. The talks would be based on resolutions agreed to at the summit of SADC heads of state in Maseru last August. The summit agreed to the establishment of a free trade area by next year, a customs union by 2010, a common market by 2015, monetary union by 2016 and a single currency by 2018. Davies said most countries, with the exception of Angola and Democratic Republic of Congo, were on board for the completion of a free trade protocol by next year. It was hoped that the completion of political changes following the successful Congolese elections of Joseph Kabila paved the way for that country's effective participation. Issues that the SADC still had to thrash out included how to deal with rules of origin and the removal of duties on sensitive products. However, Davis said, there were "huge question marks" over the 2010 deadline for a customs union. The third set of negotiations that would come to a head this year related to the economic partnership agreements between the EU and six regions of Africa, the Caribbean and the Pacific which were due next year. SA has pushed for an alignment between the proposed EU agreement with some Southern African countries and its own free trade agreement with the EU. It wants a single trade deal to govern all trade between the EU and the SADC as this would contribute to regional integration. The EU has been negotiating an economic partnership agreement with the SADC since 2004, but SA is not part of the negotiations because of its existing free trade agreement with the EU.

« Top

« Back

 


 
Published by 
Newnations (a not-for-profit company)
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774
enquiries@newnations.com