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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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: 062 - (07/03/07)

Mbeki under attack from the left
President Thabo Mbeki's time in office is drawing to a close. This was evident from the substance and the tone of his state of the nation address in Parliament. However, when one throws the presidential succession battle in the African National Congress (ANC) into the mix, it becomes easier to understand why his address appeared to lack urgency. What Mbeki promised, with decidedly less pomp and ceremony than in previous years' state of the nation speeches, was neither new nor innovative. Mbeki's position as a lame duck president is not unique. However, unlike his counterparts in the US and the UK, he wants to stay on as the leader of his party even after he is no longer head of state. No wonder he treads carefully around the many freeloaders in his cabinet. Mbeki needs to think carefully about standing against Zuma in a face-off over the ANC presidency. The risks are many. If Mbeki loses the battle, history will remember him only for his huge humiliation. The Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP) have expressed disappointment at President Thabo Mbeki's state of the nation address, saying it fell short of a comprehensive and coherent development strategy that could address the inherited structural deficiencies of South Africa's economy. This failure would result in SA taking a longer time to address unemployment, poverty, inequalities and social ills such as HIV/AIDS, moral degeneration and crime, Cosatu spokesman Patrick Craven said February 11. Cosatu and the SACP believe that government's economic policies are benefiting only a few at the expense of the poor.

The race for the leadership of the Democratic Alliance (DA) is hotting up with the news that Cape Town mayor Helen Zille has not excluded herself from the contest. Although a decision on whether she will join the race to replace current leader Tony Leon is not expected any time soon. Since Athol Trollip announced his candidacy for the leadership in November, the DA succession issue has gone quiet, with only his name up on the board. Others, including Zille, are still considering their options. It is assumed that Zille will not contest for the national leadership because it would be in conflict with her running Cape Town, by her own admission a "24 hours-a-day job". It has emerged that Zille would clearly like to be the national leader if the two jobs could be combined. The DA was plunged into a succession race late last year when Leon announced that he would not be seeking re-election when the party convened in early May for its federal congress.

The ANC defended its controversial Progressive Business Forum (PBF) as a legitimate political fund-raising exercise, but analysts have questioned the ethics involved in senior party officials meeting top business figures in return for money. Richard Calland of the Institute for Democracy in South Africa (Idasa) estimated that the ruling party had raised as much as R10m from its controversial scheme to sell the time of cabinet ministers and senior government officials as part of its fund-raising drive. Calland said by the ANC's own version that it had 2000 PBF members who paid R3000-R7000, and taking an average of R5000, it would have raised at least R10m. Calland said the forum was a clear manifestation that the party had "produced millions of rands in income in return for selling political capital of government."

Russian Prime Minister Mikhail Fradkov will visit South Africa in March in a trip intended to confirm relations seven months after President Vladimir Putin's tour. Fradkov will make just two stops in southern Africa, South Africa and Angola. Fradkov's foreign tours are much more circumscribed and low profile than those of the president. This trip seems intended to show the Russian flag in the region following the recent high-profile shows of official Chinese interest in Africa. 

Manufacturing production growth slowed to 5% year on year in December, Statistics SA said February 12, but remained strong as a relatively weaker rand offered some relief to the sector. The rand fell almost 10% against the dollar last year, helping manufacturers perform better than in previous years. While the weakening of the rand so far this year (about 4,5%) should assist those divisions battling to compete against cheaper imports, as well as those competing on global export markets, the rand is still about 8% firmer than by early October last year.

Budget Highlights Reflect a Boost to Social Programmes
Government will increase its spending on a variety of programmes in the social sector including teachers' salaries, health, welfare and public transport, said Finance Minister Trevor Manuel in his annual budget speech in Parliament February 21. Highlights in the 2007/08 financial year include - over the next three years - an extra R8,1 billion for improved teacher salaries, for teacher assistants and for support staff in schools and districts. This money will be focused on rewarding good teachers, providing support to poor schools and to improving the quality of education as a whole. Health also gets a major boost this year, with an extra R5.3 billion for increased pay for health workers and for more staff. "Government is budgeting to increase the number of health workers by about 30 000 over the next five years," says the Finance Minister. And a further R1.7 billion has been set aside to cover HIV and Aids, with treatment for about 250 000 HIV-positive patients being rolled out at 272 sites countrywide. The hospital revitalisation programme receives a further R1 billion. For public transport, water and other municipal infrastructure, there is an additional R7.8 billion. For housing, an additional R2.7 billion will bring the total allocation for this over the next three years to R32 billion. The housing budget would have risen to R12.5 billion by 2009/10 from R4.6 billion in 2003/04 - more than doubling over these six years. A further R2.4 billion goes to spending on additional police officers and to invest in new technology and forensic equipment to assist the police. "Dockets will become the norm." At the same time, an additional R1.5 billion goes to the Department of Justice to improving the work of the courts and reduce case backlogs. Government spending on the 2010 FIFA World Cup goes up to R17.4 billion - the costs of building the stadiums have been contained within the R8.4 billion previously set aside for this but government is adding a further R2.3 billion for related transport infrastructure as well as upgrades of areas around the 10 World Cup host stadiums. This brings the total to be spent from this budget on a public transport legacy to R9 billion, leaving the total of direct government expenditure on 2010 at R17.4 billion. The 2007 Budget brings increases in social grants for the poorest South Africans, in the wake of successes in previous years at curbing corruption in the social grants system. The old age pension, the disability grant and the care dependency grant are all being increased by R50 - from R820 a month to R870 a month, with effect from April 1. This increase, says Finance Minister Trevor Manuel, provides "a strong signal that money released from the reduction of corruption will be given back to those who deserve it." The Child Support Grant is also being increased, from R190 to R200 a month, as is the foster care grant, from R590 to R620 a month. The 2007 Budget also makes R10 billion available over the next three years to improve the services provided by social welfare organisations in communities. The budget going to the police will rise by 34 per cent - from R33 billion in 2006/07 to R44 billion in 2009/10, while the Department of Justice will see a 52 per cent rise in its budget over the next three years. In terms of so-called "sin taxes" on consumables, a can of beer will cost 5 cents more, while a packet of cigarettes will cost 60 cents more. A 750 millilitre bottle of spirits such as whiskey or brandy will cost R1.88 more, while tax on a 750ml bottle of wine goes up by 10 cents. And the tax on a litre of petrol or diesel will rise by 10 cents from April 4. These increases, says the Finance Minister, will bring an extra R1.5 billion to national coffers.

Budget Highlights Corporate South Africa Given R2bn Shot in the Arm
Finance Minister Trevor Manuel gave corporate SA a R2bn shot in the arm February 21, announcing plans to phase out the secondary tax on companies (STC) and slashing the rate by 2,5 percentage points in the meantime. Tax experts welcomed the move, arguing that the tax had been seen as raising the cost of equity financing and was confusing to foreign investors. Government believes abolishing the tax will contribute to lowering the cost of doing business and boosting economic growth. Manuel stopped short of reducing the rate of corporate tax as lobbied for by business, telling a media conference that this would be a "step too far". Tabling his 2007-08 budget before a joint sitting of Parliament, Manuel said the rate of the STC would be cut from 12,5% to 10% from October 1 as the first step towards scrapping it altogether. It will be replaced with a withholding tax on all dividend distributions at shareholder level from next year. The other major, and welcomed, tax measure highlighted by Manuel in his speech was the R3bn abolition of retirement fund tax on rental and interest income from March. He also announced R8.4bn in personal income tax relief, mainly to compensate taxpayers for fiscal drag. Most of this tax relief will be targeted at people earning less than R250 000 a year. Overall, net tax relief amounted to R12.4bn, which was lower than previous years, but Manuel was reluctant to pump up consumption and fuel inflation by being overly magnanimous. He stressed that the abolition of STC was not a prelude to a cut in the corporate tax rate lobbied for by business. From October, STC will be renamed a dividend tax and the tax base will be broadened to cover all distributions by companies and not just those from profits. Next year, the formal legal liability for dividend tax will be moved from the company paying the dividend to the shareholder receiving it. Companies would be charged a 10% withholding tax on dividends, which they would pay on behalf of shareholders. The retirement industry welcomed Manuel's announcement on retirement tax as it has long fought for the abolition of the tax on rental and interest income, which it regarded as a disincentive to save and unfair to individual policyholders. The abolition of the tax is part of the overhaul of the retirement fund tax regime which will see a shift towards an expenditure tax model. In terms of this model contributions to retirement funds will become fully or partially tax deductible, investment growth within funds will be tax exempt and benefits taxed. The package of envisaged reforms is due to be finalised this year. National treasury was flush with funds in formulating the 2007-08 budget as R29.5bn in additional tax revenue above the original 2006-07 budget estimate flowed into state coffers. It was thus able to allocate R89.5bn more to government spending over the next three years as well as providing for a budget surplus of 0.6% in the 2007-08 fiscal year. Non-interest government spending is forecast to grow by a real annual average of 7.7% over the next three years. In 2007-08 total government spending of R534bn, or 27.5% of gross domestic product (GDP), is forecast. Total revenue of R544.6bn (28.1% of GDP) is projected. Government expects economic growth to remain buoyant, growing at 4.8% in 2007 while CPIX inflation is expected to average 5.1% and the current account deficit 5.3%.

Police Budget to Increase to R44 Billion By 2010
Government will increase its safety and security budget by 34 percent to R44 billion over the next three years. Presenting his Budget Speech in Parliament February 21, Finance Minister Trevor Manuel said this would boost government's drive to increase to 190000 the number of police officers patrolling the country's streets by 2010. The minister told parliament that financial resources aimed at fighting crime would rise from R33 billion in the 2006-2007 to R44 billion in the 2009-2010 financial years. Since the 2003-2004 financial year, the allocations for safety and security had increased by 43 percent. In this year's budget, Mr Manuel highlighted that an extra R2.4 billion would be allocated to the South African Police Service so they could increase the number of police officers while investing in technology and forensic equipment. The budget would also allow the implementation of the salary upgrade programme that started in 2005 in the police service. Mr Manuel also noted that there had been significant increase in resources aimed at fighting crime over the past years. The government recognised, he said, the seriousness of crime in the country and would continue to provide leadership in dealing with this issue. "But effective crime fighting depends on partnerships between our law enforcement agencies and communities. "Through community police forums, all citizens have the opportunity to contribute towards making their communities safer," said the minister. Mr Manuel said he had instructed the Financial Intelligence Centre, the Financial Services Board and the South African Revenue Service to work with the police and prosecutors in dealing with financial crime. "We must ensure that neither organised crime nor abuse of stewardship obligations should be allowed to violate our hard-earned democracy and the integrity of our democracy." The budget for the Department of Justice increased by 41 percent in the past three years and would rise further by 52 percent over the next three years. "The Department of Justice receives a further R1.5 billion over the next three years to improve court capacity, reduce case backlogs and modernise the administration of justice," said Mr Manuel.

GDP Increases for the 33rd Successive Quarter
South Africa's GDP has continued with its upswing, registering yet another increase for the 33rd consecutive quarter since 1998. Figures released by Statistic South Africa (Stats SA) February 27 show that the real GDP at market prices rose by an annualised 5.6 percent for the fourth quarter of 2006, far exceeding expectations. The figure is up from a 4.7 percent revised increase of the third quarter of the same year. The corresponding real annualised economic growth rates for the first two quarters of the year were 5 percent and 5.5 percent. Economists had predicted that the figures were going to come in at only around 4.8 percent. Stats SA said the increase in economic activity for the period could be attributed to the manufacturing industry (1.4 percent) and the finance, real estate and business industry (1 percent). Also contributing to the increase were the wholesale and retail trade, hotels and restaurants industries (0.8 of a percentage point) and the transport, storage and communication industry (0.5 of a percentage point). Real value added by non-agricultural industries increased by 6 percent during the fourth quarter of 2006 while the year-on-year GDP at market prices rose by 6.1 percent during the same period. ABSA economist Chris Hart said the real GDP figure came in higher than he expected. "We had expected a 4.8 percent increase but this rise (5.6 percent) is good for growth going forward. It reflects that the manufacturing sector responds well to the supply needs of the economy," Mr Hart said. Another economist and Managing Director of SMM Financial Services Simon Mohapi, who also expected a 4.8 percent increase, said the rise was a good sign. "This shows that there is a good support level. It is a promise for people to get good jobs," he said. - In terms of the Accelerated and Shared Growth initiative of South Africa, the country aims to achieve 6 percent annual economic growth between 2010 and 2014.

Pahad Chides U.S. Over 'Volatile Environment'
Deputy Foreign Minister Aziz Pahad suggested February 20 that the US had created a far more "volatile, dangerous, and unpredictable environment" in which SA had to carry out its foreign policy. He said SA had particular concerns about how the global war on terror had become "unilateralist and militarist". His speech is one of a growing number of indications of worsening relations between SA and the US over a range of global issues, including the approach to the war on terror and the Iranian nuclear programme. In January, in its maiden vote on the United Nations (UN) Security Council as two-year member, SA sided with veto wielders Russia and China against a US resolution calling on the military government in Burma to ease repression. In remarks prepared for delivery to the Western Cape branch of the South African Institute of International Affairs in Cape Town, Pahad said the world environment was characterised by the weakening of multilateralism, no common vision of global security and the disregard for the UN charter and international law. He said there was also a rejection of international agreements, anti-Americanism, and a militaristic approach to fighting terrorism. All of these made it difficult for SA to achieve its three key foreign policy goals of eradicating global poverty, helping achieve the end of key conflicts, and dealing with priority issues including terrorism, criminal and drug syndicates, and climate change, he said. While not mentioning the US, Pahad said: "Lately there has been an increasing tendency on the part of some powerful and dominant countries to have determined that the fight against terrorism should be the global agenda's priority. "While SA supports the fight against terrorism and proliferation of weapons of mass destruction, we are concerned at the unilateralist and militarist tendencies in the name of the global war on terror." Pahad accused the US and Israel of frustrating efforts towards peace in the Middle East. "Once again it seems that powerful forces are incapable of grasping an opportunity for peace and stability and remain committed to negotiating positions that make solutions impossible," he said.

Pahad Angered by BBC Crime Broadcast
The British Broadcasting Corporation (BBC) has been slammed by a fuming Deputy Foreign Minister Aziz Pahad after the broadcaster aired a documentary on crime in SA, broadcast at the time that President Thabo Mbeki made his state of the nation address. The documentary concluded that SA was the crime capital of the world. African National Congress (ANC) MP Mike Masutha got the debate rolling on February 27 with a member's statement in the National Assembly that said crime statistics showed there had been considerable improvements in the situation in Hillbrow. He condemned the BBC's programme. Pahad, using the ministerial slot to comment on members' statements, lashed out, saying that the BBC report was "selective, one-sided and distorted". One could not understand how it could have come from an institution with such a good reputation for fair reporting. He said government had many times acknowledged that crime was unacceptably high in SA and had consistently made more and more resources available in the fight against crime. "We need an explanation for this broadcast," Pahad said. The ANC, on its website, also accused the BBC of being racist. It also said the SABC could easily go to Britain and do a similar exposé in parts of London suggesting that Britain was also sinking under a wave of crime. According to the BBC website, its world news editor, Jon Williams, responded by saying that the BBC had done similar programmes in south London on the incidence of gun crime. "But there's no question that crime is a real issue in SA. John Simpson's report touched a raw nerve - but to liken the BBC's report to 'the most die-hard racists in the country' is absurd."

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Toyota Eyes Durban Airport for Growth Plan

Toyota SA had shown interest in using the Durban International Airport site for its expansion when the new King Shaka airport starts operating in 2009, eThekwini deputy mayor Logie Naidoo said February 12. But Toyota will have to battle for the site as other motor component manufacturers and a chemical firm are also itching to buy it. Naidoo said that Toyota, which operates the biggest assembly plant in Africa in Prospecton, south of Durban, had indicated it might purchase the site to create a Toyota City-type complex, similar to that in Japan, where vehicle assembly and component manufacturing operations are close by. "The Durban Motor Show in March and the A1 Grand Prix this month help to build confidence in the city. Durban International's site is flat, serviced and its new car park has been designed so it can easily convert into offices," Naidoo said. The airport has recently spent R100m to upgrade is parking facilities, but it is scheduled to close when the new airport being built at La Mercy, 30km north of Durban, comes on stream in 2009. Toyota SA operates on a 79ha site in Prospecton and is nearing the end of an expansion that will see it produce 940 vehicles a day, or 220000 units a year. Durban Motor Show manager Phillip Otto said KwaZulu-Natal had become a portal for automotive imports and exports as well as a significant platform supporting the growth of SA's automotive sector. He said vehicle sales in the province had been 3,4% above the national average in the past three years, when vehicles sales nationally reached high levels. Durban's port handled 413617 vehicles last year, of which 301267 were imports while 112350 were exports. There are more than 50 car component manufacturers in the province. A scattered handful of them includes aluminium casting manufacturers in Pietermaritzburg, leather and textile seat-cover makerss in Amanzimtoti, hydraulic cylinder, axle and specialised mining and industrial vehicle makers in Empangeni and upholstery firms in Ladysmith. Strategists have suggested that the majority of industrial production might gravitate towards major ports and away from the traditional engineering hub of Gauteng over the next few decades as more industries become integrated in global supply chains.

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Russia Welcome to Tender for Construction of Nuclear Plant

Russia is welcome to participate in the tendering process for the construction of South Africa's second conventional nuclear energy plant and it has already indicated its interest in this regard. However, Foreign Affairs Minister Nkosazana Dlamini Zuma made it clear February 22 that for Russia to participate in the construction of the new plant it would have to go through the normal tendering process and that there would be no "head-picking". South Africa currently has one conventional nuclear station - Koeberg in Western Cape, which contributes baseload power of about 1800 Mega Watts to the national grid. Addressing reporters following the two-day SA-Russia Joint Intergovernmental Committee on Trade and Economic Co-operation, Minister Dlamini Zuma said South Africa was seeking to expand its use of nuclear energy. Although no agreement was signed between the two governments, Minister Dlamini Zuma told reporters that the parties had discussed and agreed to work together in this regard. She however said the South African mining company Harmony and Russia's Renova signed an agreement to mine Uranium - a mineral which, when enriched, is used as nuclear fuel. "As you know we are responsible members of the Non-Proliferation Treaty (NPT) and we should be assisted [in acquiring nuclear energy]. "We discussed the matter and Russia is willing to work with us right though the process from mining to the final stage of nuclear energy," said the minister. Russian Minister of Natural Resources Yuri Petrovich Trutnev expressed his country's willingness and readiness to invest as much as was needed if it won the tender to build the nuclear station. "It is up to South Africa if it invites Russia to participate in the building of the nuclear station. If a decision is taken in this regard we will be ready to participate," Mr Trutnev emphasised. The ITEC agreed to set up a sub-committee to deal with cooperation in the peaceful use of nuclear technology. Meanwhile, the two ministers expressed their satisfaction with the progress the ITEC had made during the two days. Dr Dlamini Zuma said, while some agreements had been entered into, more work was being done to formulate legal framework for cooperation in a wide range of sectors where such legislation did not exist. Amongst others South Africa and Russia agreed to cooperate in the exploration and use of outer space for peaceful purposes; various fields of science and technology; social issues and to enhance trade relations. "We do all these to improve our economic and trade relations, which in the end contributes to building a better life for our people," explained minister Dlamini Zuma.

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Famous Brands Bites Off 75 Percent of Wimpy UK

Family restaurant franchise group Famous Brands has acquired a 75% stake in Wimpy UK for £3m, with an additional £2m to be invested to re-energise the brand. Wimpy UK is the largest independently owned franchised restaurant chain in the UK and the owner of the Wimpy trademark in 15 countries in Europe. Famous Brands chief operating officer Kevin Hedderwick said February 27 that the Wimpy trademark had been globally fragmented. The acquisition would unite the trademark in Wimpy's two major markets, SA and the UK, improve the brand in terms of uniformity and enhance the groups' aspirations to be a global brand. The 75% stake was bought from Wimpy UK management. The other 25% is held by Halifax Bank of Scotland. Hedderwick said a £9m debt acquired in Wimpy UK would not affect Famous Brands' balance sheet. Wimpy UK has 194 outlets across England, Scotland and Wales, and operates another 20 under a license arrangement in Ireland. Famous Brands' Wimpy Southern Africa network has 452 restaurants. Famous Brands has 1281 restaurants under franchise. Its other brands are Steers, Debonairs Pizza, FishAways, House of Coffees, Brazilian Coffee Shops and Whistle Stop. Famous Brands group financial director Paris Papageorgiou said the acquisition would not be earnings enhancing in the short term because of the investment needed to realign it with the more profitable Wimpy SA model. The acquisition may take two years to start having a favourable effect on group earnings. Hedderwick said Wimpy UK was well positioned in a growing market where there was increasing demand for convenience and casual dining was evolving as a way of life. Over the medium term the intention was to explore opportunities to expand the Wimpy brand globally. Opportunities to export Famous Brands' manufactured products to Wimpy UK would also be investigated. The long-term goal was to launch a multiple brand offering for Famous Brands globally.

US-SA Wine Joint Venture Starts

The first joint venture in the wine industry between the US and SA was opened by the US ambassador to SA, Eric M Bost, in Stellenbosch February 26, with about 75% of winery Vilafonté's produce destined for the US market.
The joint venture was started with US investment and was being financed in SA, Mike Ratcliffe, director of Vilafonté and deputy chairman of the SA Wine Industry Trust, said. The groundbreaking red wine project was a partnership between a group of "quality-driven" wine specialist from SA and the US. Vilafonté is the first winery in SA to be focused on producing wine for the luxury market. Its annual production is 3000 cases and its wines sell in SA for R250 a bottle, but could be priced higher in the US, Ratcliffe said. Ratcliffe cautioned South African vintners not to underestimate the power and significance of the US market. The fact that the US did not even represent 1% of the South African export market "shows there is a lot of untapped potential". "It is not only one of the biggest wine markets in the world, but as a market placing the emphasis on quality wine instead of quantity, the US offers successful exporters and high-end brands -- such as Vilafonté - a good return," he said. This could not be said for overtraded European markets, "where the mass volume discount culture seems to remain king". Ratcliffe said that by strengthening the ties between US and South African wine cultures, both industries would feed off the uniqueness of each other and both. "Looking at the global wine industry from a macro viewpoint, it is clear that the international wine industry is in a slump. Global oversupply is growing at an unprecedented rate and the so-called wine lake continues to deepen. "The South African wine industry holds an extremely small volume share of total world wine production. Despite this, the local industry also finds itself in a position of oversupply symptomatic of low investment levels in international market development. "A greater marketing focus on the world's largest economy, with the support of the Africa Growth and Opportunity Act, should pay handsomely," said Ratcliffe. Bost also announced the formation of a trust, the US-SA Foundation, based in Washington. The foundation's aim is to raise awareness of South African wine in the US through integrated fundraising and promotion. Bost said the annual project would see up to 20 black wine apprentices spending three months a year in Virginia and California, working on wine farms and attending classes at vinicultural and viticultural institutions. So far R4m had been raised and it was hoped that the project would assist in "expanding the horizons of previously disadvantaged persons".

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Aids-Orphan Explosion Expected Unless Government Acts

The number of South African children who have lost at least one parent to AIDS could "explode" to more than 5-million by 2015 unless the government makes a serious effort to curb the pandemic, the senior programme officer of the United Nations Children's Fund, Juliana Lindsey, said February 26. She said SA could reduce the effect of the disease on children with the programmes suggested in the health department's recently launched National Strategic Plan on HIV/AIDS for 2007-11. Late last year government launched its 365 Days of Activism for No Violence Against Women and Children campaign, intended to engender a better co-ordinated and more comprehensive national response to gender-based violence. About 55000 rapes where reported in the 2005-06 police reporting year and 40% of the victims were under 18. "I believe SA can cope," said Lindsey. "The numbers are daunting but, with SA's resources and policies, you can cope." More than 2-million children in SA have lost a parent to AIDS. This is 16% of children under 14, Lindsey said. She said orphaned children were particularly vulnerable to crime. Of the 18500 murders reported to the police in 2005-06, at least 1000 of the victims were children and it was a reasonable to assume that most of the remaining 17500 murdered people were parents. SA needed to "scale up" its child- centred policies in the same way it had improved the child-support grant over the past 10 years, Lindsey said. The child-support grant had been introduced with a very low age limit but the government was now considering offering the grant everyone younger than 18. The grant was benefiting more than 7-million children. Similarly, programmes such as community-based home care and no-fee schools should be widened, she said. She said she was heartened by the extent to which South African society -- "the grannies and aunties and neighbours" -- went out of its way to help orphaned children. "I take my hat off to these people. They are trying to ensure that these children grow to become the backbone of South African society."

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Russia Seeks to Improve Trade Relations

Foreign Affairs Minister Nkosazana Dlamini Zuma has urged South Africa and Russian delegations to come up with ways to improve trade between the two countries. High ranking delegations from the two countries were locked in a two-day meeting at the Presidential Guesthouse February 21-22 to discuss strengthening of their already healthy bilateral political and economic relations. The meeting forms part of the 6th session of the South Africa - Russian Federation Joint Intergovernmental Committee on Trade and Economic Co-operation (ITEC). ITEC is co-chaired by South African Foreign Minister Nkosazana Dlamini Zuma and the Russian Minister of Natural Resources, Yuri Petrovich Trutnev. Welcoming the delegation from Russia, Minister Dlamini Zuma called on the delegations to discuss ways to take trade relations to the same level as the good political relations that existed between South Africa and Russia. "We need to see what it is we can do to make sure that our economic trade and other co-operations match the political cooperation and also match a number of agreements that were signed between the two countries," Dr Dlamini Zuma explained. She acknowledged that while a lot of progress had been made, more work still needed to be done to strengthen bilateral relations between South Africa and Russia, particularly in the economic field. "We still need to give a lot of push to the trade-related issues and around May we are hoping for a South African business delegation to visit Moscow and other parts of Russia. "Through that visit we hope to consolidate the promotion of trade and economic development of our countries," she said. The inter-sessional ITEC meeting which the parties held in July last year, had evaluated the committee's progress and also mapped out its direction for the rest of the year. The minister added that the visit in September by Russian President Vladimir Putin, amongst others, had added more impetus to the relations between the two countries. A number of agreements, including co-operation in satellite and space-faring technology were signed during President Putin's visit in Cape Town. Mr Trutnev reiterated Dr Dlamini Zuma's sentiment that the ITEC needed to enhance trade between South Africa and Russia, saying trade numbers were very minimal. He called on the delegations to address any challenges, which existed that hampered trade relations. "We want to know what is holding back [trade] between our two countries," said Mr Trutnev.

Switzerland to Collaborate on Global Conflict Resolution

South Africa and Switzerland will collaborate on global conflict resolution, it emerged following a meeting February 19 between Deputy Foreign Affairs Minister Aziz Pahad and Swiss counterpart, Michael Ambuhl. Their interaction at the 12th meeting of the Swiss-South Africa partnership group included discussing a Memorandum of Understanding to deepen relations between their countries. "We already co-operate in many areas and now after this meeting we have worked out how to intensify that joint co-operation, not just bilaterally but in terms of other countries," the deputy minister said following their meeting. He added that South Africa would be working closely with the traditionally neutral European country as both countries sought to play extended roles in conflict and crisis resolution in third world countries. Minister Pahad said the Swiss were very involved in conflict resolutions in Africa and the Middle East, adding that their governments had worked out further co-operation in Burundi, the Democratic Republic of Congo and in Sudan's Darfur region. Seeing as the Swiss were already involved in conflict-resolution processes in many of these countries, the question was how to proceed with a trilateral arrangement that involved co-operation in settling disputes in troubled third-party countries or regions, the deputy minister said. "Similarly on the Middle East, [the issue under discussion was] how can we work together to see where we can give continuing impetus to the peace process [there]." The two countries also committed themselves to "staying constantly in touch to see how we can contribute to finding a solution to the Iranian nuclear issue." Minister Pahad told BuaNews there was also an "excellent" exchange of views around reform of the United Nations Security Council. "Switzerland, whose 500-year history of neutrality as a leading principle of its foreign policy makes it an attractive point of mediation between parties involved in various conflicts and sees South Africa as an important "pillar of stability" in Africa, said Mr Ambuhl. He said the country was taking an active role as a mediator and facilitator in peace processes in the Sudan and Africa's Great Lakes region. Other contributions included assistance with constitutional and security sector reforms, on delivering justice and guarding against impunity, on free media coverage, free elections and non-proliferation of small arms and on clearing land mines. Switzerland is one of the biggest foreign investors in Africa. The European country had also assisted with the development of a crucial early warning system for the African Union, which serves to provide timeous alerts on potential and actual outbreaks of conflict, making it far easier to prevent escalation. Mr Ambuhl said that South Africa, with whom Switzerland shares a volume of trade equivalent to about R12 billion, has recently become one of their key strategic partners, alongside the United States, Russia, China, Japan, India and Brazil. He said he looked forward to the signing of a Memorandum of Understanding that would underscore stronger mutual co-operation, which the two countries expect to sign shortly. Another area of further co-operation would be through the vehicle of the Swiss-South African Co-operation Initiative "as a unique model for a public-private partnership with Swiss companies active in South Africa." Switzerland is the fifth-largest foreign investor in South Africa, he said. Mr Ambuhl added that he looked forward to even stronger partnership within the framework of the free-trade agreement between the European Free Trade Association and the Southern African Customs Union, which only needs to be signed to come into effect.

South Africa and Iceland to Enhance Trade And Political Cooperation

Foreign Affairs Minister Nkosazana Dlamini Zuma and her Icelandic counterpart Valgerdur Sverrisdottir have committed their countries to increase trade levels between their countries. Speaking to the media following their meeting Fwbruary 27, the ministers committed to strengthening the already healthy political relations between the two countries. In this regard, Ms Sverrisdottir opened Iceland's South African Embassy in Pretoria on Monday, a move Dr Dlamini Zuma welcomed. The Icelandic minister is on her second stop in Africa after completing a visit to Uganda where she inspected the work of an Icelandic aid agency there. Upon conclusion of their meeting, ministers Dlamini Zuma and Sverrisdottir concurred that they had had "constructive and successful" discussions. Minister Dlamini Zuma said while Iceland was a small country, its achievements were impressive. "Iceland managed to move from being one of the poorest countries in Europe to being one of the richest with a very high standard of living for its people. "So there is quiet a lot we can learn from Iceland ourselves," Dr Dlamini Zuma said. She said the two countries were still discussing a number of agreements to improve trade and political co-operation. These include amongst others an agreement on the protection of investment, one on double taxation, trade and investment agreement, aviation agreement. Minister Sverrisdottir explained that the highlight of her visit to South Africa was opening the new Embassy. "I hope that this embassy will really strengthen the ties between our countries," she said. Ministers Sverrisdottir and Dlamini Zuma expressed their concern at the low levels of trade between South Africa and Switzerland, the balance of which is also in favour of South Africa. They explained that theirs was to create legal frameworks and thus an enabling environment for businesses in the two countries. They also said they would look at the possibility of co-operation in the field of clean energy, including hydro- and geothermal energy, amongst others. Minister Dlamini Zuma also expressed South Africa's support for Iceland to wish to join the United Nations Security Council (UNSC), saying the two countries could work together to address situation in Africa as members of the continental body. Earlier in the day Minister Dlamini Zuma and Argentina's Jorge Taiana officially opened the two-day South Africa - Argentina Joint Bilateral agreement. The JBC aims to take bilateral political and economic relations between the two countries to new heights. An extradition treaty and a bilateral agreement to co-operate in sport have also been signed.

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South Africa and Russia to Team Up On Sales of Uranium

Major uranium producers SA and Russia planned to establish international nuclear centres to facilitate the sale of uranium to global markets, Minerals and Energy Minister Buyelwa Sonjica said late-February. Russia was courting SA and other countries to co-operate on finding new technologies to process uranium to fuel nuclear power stations, said Sonjica. Government planned to declare uranium a "strategic mineral" and would start stockpiling the sought-after nuclear fuel in part to ensure it could power SA's ambitious nuclear expansion programme. Russia was "looking at SA as a market, but probably we can look at co-operating with them on beneficiating uranium", Sonjica said.
Government wanted uranium processing to take place in SA as "we want to have some control over it". SA is the only country in Africa with a nuclear power plant. Borrowing from the French example, Sonjica said, SA would also look at recycling and reprocessing spent uranium fuel. "We think it will help us in terms of ensuring that we have the source for generating nuclear (power)." French Industry Minister Francois Loos said SA should build a second conventional nuclear power plant instead of investing in the highly technological pebble bed modular reactor (PBMR) -- a new nuclear power plant to be established near the Koeberg plant. Loos said the PBMR project might not significantly alter SA's inadequate electricity capacity. SA has embarked on a massive nuclear energy expansion programme, with 24-30 new nuclear plants being mooted. The entire project is expected to cost R900bn. France has encouraged SA to embrace conventional "third-generation" nuclear power plants to expand electricity capacity. French group Areva is bidding to build such a 1300MW plant. Environmental lobby group Earthlife Africa has criticised government's pursuit of nuclear power stations. The group said the "mutual back-scratching" between Areva and Eskom seemed to confirm its suspicion "that the only way to get anybody to invest in the PBMR is to offer a substantial kickback ... in the form of the purchase of a conventional nuclear plant from Areva". With Reuters

China 'Undercuts' Steel Sector

Imported Chinese steel is undermining the local steel industry, which needs to find ways to become more competitive, says Steel and Engineering Industries Federation of SA (Seifsa) manager Michael McDonald. During a hearing of Parliament's finance committee, McDonald estimated that imports from China, and to a lesser extent India, were undercutting South African steel manufacturers' prices by 15%-50% and in some cases by more. "In a number of instances, imports from China do not meet local standards and in some cases do not even meet compulsory safety standards," he said. The clothing and textile industries also face an onslaught of Chinese imports resulting in the closure of factories and the loss of thousands of jobs. The situation became so dire that curbs were imposed on categories of Chinese clothing and textile imports earlier this year after a deal was struck between the South African and Chinese governments. The local metal and engineering sectors contribute about 6% to gross domestic product and generated more than R252bn in turnover last year. They represent nearly 30% of all local manufacturing in terms of turnover and employment and employ about 275000 workers. McDonald said that Seifsa had conducted a survey to determine the extent to which Chinese imports were undermining the competitiveness of local manufacturing. He said that Seifsa would use the survey data to support representations to government in a bid "to find more effective means of assisting our members to become more competitive and able to survive in what is becoming an increasingly hostile environment." The industry was also being hobbled by the shortage of artisans, with the initiative on priority skills acquisition generating more debate than action. Apprentice training numbers had fallen dramatically over the years from about 13000 in 1982 to just more than 3400 last year.

Implats Moves On Afplats Deal As Share Soars

IMPALA Platinum (Implats) was forced to push ahead with the announcement of a R4,2bn takeover of African Platinum (Afplats) last week after rumours in the market sent shares in the junior platinum group soaring, Afplats CE Roy Pitchford said February 16. Speaking on Classic Business Day, Pitchford said they were obliged to give details of the deal in terms of the regulations of the UK Takeover Panel. Afplats owns the Leeuwkop platinum project near Brits, which is initially forecast to produce about 300000 ounces of platinum group metals in concentrate a year for 20 years. Aflplats directors, who were advised by JPMorgan Cazenove, considered the terms of the offer to be fair and reasonable and had recommended that shareholders accept it, the groups said. Implats said it already had irrevocable undertakings from shareholders holding 21,3% of Afplats shares to accept the offer. "This transaction is complementary to the strategic partnership agreement entered into with Afplats and represents an attractive opportunity for Implats to participate in the development of one of the largest remaining resources in the western limb of the Bushveld igneous complex," Implats CE David Brown said. The acquisition would help create sustainable long-term value for the group. In December, Implats agreed to buy 29,9% of Afplats' three South African subsidiaries for just over R1bn. "This looks like a pretty good deal for Implats," said Andrew Joannou, portfolio manager at Renaissance Specialist Fund Managers. "It has its operational risk, but if things go well for them this looks like a pretty good offer." Joannou said as an exploration project, Afplats carried a certain amount of risk. Much would also depend on the price of platinum group metals. However, he said they had been reasonably conservative in their assumptions. "Nobody knows all the possible failures and risks that can affect a new project," Joannou said. "I think it's foolhardy to say it's a bargain for Implats because you are dealing with risk versus return. It's difficult to assess the risk side of the equation." He said it was positive that Afplats management had given its endorsement. Impala shareholders would also have to vote on the transaction. "On the balance of probability, if they can get it through at 55p, as an Implats shareholder we would probably be positive about this deal," Joannou said. Pitchford said the offer would remove the uncertainties inherent in its investment in the Leeuwkop project for shareholders, who would get a "significant and certain return on their investment immediately".

Russians 'In Market' for R38bn Anglogold Stake

Mining giant Anglo American is playing its cards close to its chest on rumours that it plans to sell its 41% of AngloGold Ashanti to Russia's largest gold company, Polyus - a stake worth R38bn. Although a number of prospective buyers have already expressed interest, the UK Sunday Times reported February 18 that Polyus had "approached Anglo American to buy its stake" in AngloGold. The future of AngloGold Ashanti, the world's largest gold producer behind Canada's Barrick, remains uncertain after SA's largest company, Anglo American, said it would sell its gold assets within two years as part of a wider overhaul that will also see it reduce its interest in paper unit Mondi. The sale of the AngloGold stake would be one of the largest deals in SA's gold mining history. Polyus was formed in March with the gold assets of Russia's Norilsk Nickel. It has some experience with South African gold firms, having previously held 20% of Gold Fields, which it sold last year for R14bn. The Sunday Times report says Polyus is eyeing either part or all of Anglo American's 41% interest, which at AngloGold's current price of R343 a share, would be worth R38bn. Anglo American predictably would not provide any further information, with spokeswoman Anne Dunn saying the company "would not comment on speculation" and that Anglo would have made an announcement if there had been anything to say. AngloGold was equally tight-lipped, with spokesman Steve Lenahan saying he would not comment. AngloGold CEO Bobby Godsell, who also sits on Anglo American's board, said "we would like certainty as soon as possible" around the Anglo American sale to reassure shareholders -- suggesting that various discussions are already taking place. But if Polyus is indeed interested, it remains to be seen whether it will want to buy all of Anglo's 41% interest in AngloGold, as this would oblige it to make an offer to all AngloGold shareholders. By June, Polyus had about R11bn ($1,6bn) in cash and another R8,6bn ($1,2bn) in investments, of which R7bn was being held in bank deposits. Polyus also had a comparatively small amount of debt on its books, suggesting it could afford to finance a big acquisition. In September, Polyus set in place a new development strategy to increase its gold output more than threefold by 2015. It would do this by "boosting production and acquiring new assets and licences in Russia and internationally, where suitable opportunities arise". If Polyus were to get its hands on AngloGold, one of the three largest gold companies in the world alongside Canada's Barrick and the US-based Newmont, this would help it achieve its goals earlier than expected.

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Anglo Signs $450m Deal for Data Services

Mining house Anglo American has awarded a seven-year contract worth $450m for its global operations to obtain all their voice and data services from Hewlett-Packard (HP) and BT, formerly British Telecom. The outsourcing deal is the first win of such a magnitude for the South African branch of BT. BT and HP will manage Anglo America's data centre operations, voice calls and the computer systems used by employees in about 18 countries. Ninety staff will transfer to HP and BT worldwide as their jobs are taken over by those companies. BT's local branch would grow substantially through the deal, said its regional GM Brian Armstrong. Although he did not put a figure on the number of staff transferring locally to join BT SA's existing 75 staff, he said additional recruitment would also be necessary to handle the workload. Regulatory requirements and Telkom's de facto monopoly in SA mean BT will rely on Telkom for much of the physical infrastructure to carry Anglo American's calls. But BT was likely to use the new operator Neotel for some of the networking infrastructure, Armstrong said. There will be a two-year transformation project to support Anglo American's quest for growth and more efficiency by standardising and consolidating its technology infrastructure globally. . BT has had a presence in SA for 15 years, but it was relatively low key until now. Its main focus is to handle international voice and data services for its clients, chiefly multinational groups. Armstrong said this promised to be a busy year for the local branch. In April it would launch a corporate social responsibility investment programme, and by the year's end it hoped to announce a black empowerment deal. Unlike some multinationals, BT would not seek exemption from equity ownership requirements, as it was willing to create a joint venture company and sell some shares to black partners. SA is also high on the list of possible locations for a call centre to handle calls for BT's operations around the world. If SA is chosen, BT will commission an existing call centre operator to provide those services. This could create up to 700 jobs.

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