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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: 064 - (30/04/07)

April 26 marked 13 years since South Africa's first multiracial elections brought the African National Congress (ANC) to power. A country once on the brink of a civil war is now a stable multiparty democracy and one of Africa's freest economies. Yet the ANC's behaviour is increasingly intolerant towards political opposition, raising fears for South Africa's political future. The end of apartheid was supposed to put an end to censorship. But as an internal inquiry revealed last year, ANC-aligned managers have banned a number of outspoken critics from appearing on the SABC. The ANC has also tried to usurp power in Cape Town, the last major city remaining outside its control. Cape Town is run by mayor Helen Zille. A recipient of the United Nations' Human Rights award, Zille is a woman of unimpeachable anti-apartheid credentials. But her membership in the Democratic Alliance makes her unpalatable to the ANC, which recently tried to replace Cape Town's executive mayoral system with an executive committee on which the ANC would have had substantial representation. The culture of political correctness, actively encouraged by the ANC, stifles public debate over the direction of South Africa's economic and social policies. Those who dare to criticise the government are often labelled as racists. 

Though the ANC continues to enjoy much of the international support it received in the days when it fought apartheid, its political tactics remain rooted in the Cold War. When the apartheid government cracked down on the ANC in the late 1960s, many of its top members went into exile. Some, including Mbeki, went to the Soviet Union and became members of the ANC's sister organisation, the South African Communist Party (SACP). While in exile, the ANC cadres were exposed to the rigid structure and antidemocratic nature of the global communist movement. On his release from jail, Mandela undertook the difficult task of modernising his party's outdated political and economic agenda. He helped cut the ANC's close link with the SACP and shed much of its Marxist ideological baggage. However, Mbeki's appointment as president ensured that the ANC retained its Marxist party structure and its intolerance of political opposition. It's long past time to reassess the ANC's democratic credentials. The party appears increasingly interested in little more than concentrating and maintaining power. There needs to be condemnation of policies that undermine the rule of law, independence of the judiciary, freedom of the media and the functioning of opposition parties in South Africa. Criticism will only be effective, however, if it is loud and unambiguous. 

When President Thabo Mbeki and other leaders of the Southern African Development Community (SADC) met in Tanzania early April to address the crisis in Zimbabwe, they responded by announcing another round of "quiet" diplomacy. Not a word was said in public about how Zimbabwean security forces arbitrarily arrest, detain and brutally beat opposition leaders and ordinary citizens around the country. In an effort to end the crisis, SADC mandated Mbeki to lead its efforts to mediate a dialogue between Zimbabwe's ruling party and the opposition. But Zimbabwe's worsening crisis will not be resolved until SADC leaders start talking openly about the massive human rights violations committed by the Mugabe government, and demand an immediate end to them. If the SADC is serious about its solidarity with the people of Zimbabwe, it needs to stand up for justice and human rights in Zimbabwe.

The South African government has given an early signal of its response to Nigeria's disputed elections by both congratulating President-elect Umaru Musa Yar'Adua and appealing to Nigerians to use "peaceful and constitutional means" to redress their election grievances. In a statement released by the Department of Foreign Affairs, the government said President Thabo Mbeki had wished Yar'Adua well and assured him that South Africa was ready to "extend a hand of solidarity with the people of Nigeria." Mbeki had also identified himself with a statement in which the Economic Community of West African States (Ecowas) said Nigerian authorities should empower electoral tribunals quickly to resolve all disputes. Reuters news agency reported from Abuja that most countries had responded to the elections with either silence or criticism, and that South Africa's was the first "positive message" from a foreign government.

The African Court for Human and Peoples' Rights is to start its operations after July this year, Judge President Bernard Ngoepe said April 24. "I don't think that the court will be able to take cases by July this year due to logistical problems, maybe by the second quarter of the year," he said, detailing the rationale behind the establishment of this court at a seminar hosted by the Institute for Security Studies. The logistical problems include finding a building for the court chambers in Tanzania and the appointment of the Registrar of the Court, who will be in charge of the court's administration. The court has no criminal jurisdiction and would only deal with issues pertaining to violation of human rights. Ngoepe explained that non-governmental organisations and individuals, for instance, could approach the court to institute actions against their states. This process would be taken forward if the implicated government signed a declaration of consent to allow for the case to be heard. Ngoepe said member states of the AU would be required to sign a declaration of consent, which would pave the way for any case of human rights violations to be brought forward against them. While the court has a clear mandate of handing down judgements on human rights violations, it remains to be seen whether such judgements would be enforced by the governments concerned. 

The South African Reserve Bank has kept the repo rate unchanged at 9 percent, following its second meeting of 2007, April 12. The last MPC meeting in February also resolved to keep the repo rate unchanged after hiking it four times by 200 basis points in 2006 in a bid to curb rampant consumer spending. Credit extension by banks to the private sector had grown at an "uncomfortable" rate the governor said, referring to consumer credit spending which the Reserve Bank has long cited as a contributing factor to increasing the repo rate. Petrol price changes over the past few months were an indication of the volatility in the international oil market. "The risk posed by oil and food prices appeared to have increased," the governor said, outlining other contributing factors considered by the MPC in their decision.

Cosatu Denies Having Sidelined Zuma
The Congress of South African Trade Unions (Cosatu) has been forced to fend off a report that it had ditched African National Congress (ANC) deputy president Jacob Zuma in his bid to become the ruling party's next president. The labour federation said April 15 "there is no truth" to a report … that suggested Cosatu had dumped Zuma in favour of ANC secretary-general Kgalema Motlanthe for the ANC presidency. The ANC's succession battle, which comes to a head in December, has left the ANC-led tripartite alliance, including Cosatu, deeply divided as factions lobby for their candidates. This intense politicking has resulted in mistrust and paranoia among its leaders. However, supporters and critics of Zuma in Cosatu denied that they had endorsed Motlanthe. Cosatu secretary-general Zwelinzima Vavi, a staunch Zuma supporter, confirmed the official position of the federation and said no such discussion had taken place in Cosatu structures. "There was never such discussion about Jacob Zuma or Kgalema Motlanthe. We are drafting a discussion document which will guide our discussions on the ANC leadership but we have not discussed any names at all," Vavi said. Opposition to Zuma in Cosatu stems from the belief that he is not a genuine candidate of the left and that it would be unwise for Cosatu to put all its eggs in Zuma's basket. While Vavi's support for Zuma is a matter of public record, the federation has never discussed or endorsed Zuma as its preferred candidate in the ANC's leadership race.

ANC's Dirty Little Secret - All Expertise is in White Hands
Trevor Manuel should be complimented for opening an important debate on the socio-economic health of South Africa. Manuel is right to be alarmed at the growing disparity between the rich and poor. But it is his very economic policies which are directly fuelling this problem. When you look at South Africa now, it's obvious there is a huge economic boom with an abundance of prosperity in some quarters. But South Africa is like a movie set - it's all a facade. When you look behind the scenes you find very disturbing facts. The average age of artisans is well over 50. There are no new artisans joining the ranks. It's almost impossible to recruit experienced professional engineers. Hospital services are collapsing. The great majority of the growing population is technologically illiterate. Manuel admits all this but what he doesn't admit to is that, for the illiterate poor, the problem is essentially unfixable. The very foundation of ANC policy is that the problems of the poor can be soundly beaten by dispensing housing and education. But this is an impossible task without social discipline - and that's the root problem with Manuel's policies. It's the job of the government to provide fertile soil for economic growth. But any gardener will tell you that, in fertile soil, the most prolific growth occurs among the weeds. And if you want a healthy garden, you must be ruthless about yanking the weeds out. This is simply not happening. Nowhere does Manuel in any way reward the poor who have small families or incentivise young girls against teenage pregnancy. The socio- economic policies of South American countries, with similar problems, are streets ahead on this. The dirty little secret of ANC economic success is that it is running on the momentum left over from the apartheid era. All the technical expertise and business acumen resides in whites. And as this expertise is naturally retired, encouraged to emigrate or forcibly replaced by less bright affirmative action appointments, so the future of this country is visibly dimming. The upshot is that more and more of the poor are being sustained by fewer and fewer competent citizens. And just like an illegal pyramid scheme, eventually this pack of cards must collapse! It is the root problems you must address minister, but are you listening?

Forgotten Continent?
The latest figures published by the Organisation for Economic Co-operation and Development will alarm anyone who cares about Africa. While aid payments to the developing world rose by a healthy 30% in 2005, these figures show such donations fell last year. The Italian contribution to world aid budgets has been especially poor. Germany's has been unimpressive. Aid from Japan fell by almost 10%. And donations from the world's largest economy, the US, fell by 20%. Overall, the rich countries' governmental aid to the poorest nations totalled R370 billion in 2006, down from R742bn in 2005. This represents the first drop in aid payments in real terms since 1997. This come only two years since world leaders gathered in Gleneagles to promise a doubling of aid to Africa by 2010. At that time, Bob Geldof, the organiser of the Live8 campaign, declared: "Never before have so many people forced a change of policy on to a global agenda." He went on to argue that the deal would save the lives of 10 million people in Africa. But such successes were always contingent on delivery of the funds. The world's richest nations are also falling some way short of their commitment - in terms of the Millennium Development Goals - to devote 0.7% of their gross national incomes to international aid each year. Only Sweden, Luxembourg, Norway, the Netherlands and Denmark are doing so. The OECD says the decline in aid donations last year was to be expected after the exceptionally high support given by the rich world in 2005. The argument that "aid does not work" is still being aired, the voices of those arguing that intergovernmental cash transfers merely feed corruption in the developing world and fail to reach the very poorest are growing louder. African countries obviously need to reinforce their commitments to good governance (and deal with the likes of Zimbabwean President Robert Mugabe) if they are to hold out for aid. But it would be reassuring to know that the commitments made by world leaders at Gleneagles were more than just hot air.

UN Organ Sets Dedicates $100 Million to Combat Poverty
The United Nations International Fund for Agricultural Development (IFAD) has set aside over $100 million (R700 million) to combat rural poverty in developing countries. These continents include Africa and Asia, as well as regions of Latin America and the Middle East. The IFAD's executive board took this decision at their meeting in Rome April 22. The board earmarked $63.5 million (approx R447 million) in loans and $59.2 million (approx R417 million) in grants for Burundi, Cambodia, Comoros, Ethiopia, Kenya, Paraguay, Sierra Leone and Syria. The grants also include $10 million (approx R70 million) for seven international centres conducting research in agriculture and providing training and technical assistance. In this regard, the recipient countries will each use the money to improve the lives of the rural poor. In Burundi, a grant of almost $14 million will fund a project to rebuild the central African nation's livestock sector which was almost destroyed by 12 years of civil war. IFAD Senior Director, Gary Howe said by increasing access to technology, veterinary services and markets, this scheme would allow poor people in rural areas to improve the value of their products and improve the livestock industry. "Farmers in Burundi will benefit from training and research provided by new field schools," he said. Meanwhile in Cambodia, a $9.5 million (approx R66 million) grant will finance a plan to increase the access of 26 000 households to advance crop and livestock technology. In Syria, over $20 million (approx R140 million) will be provided in loans to meet the challenges posed by a growing population on the available natural resources. The scheme will improve irrigation systems and foster the growth of small businesses, including sheep and goat rearing, rural transportation services and small-scale trading. Under a new framework, countries determined to least be able to repay debt will receive 100 percent grant assistance from the IFAD. While medium debt sustainability will receive 50 percent grant and 50 percent loan assistance from the agency. "This new framework means that a poor country's opportunity to reduce poverty will no longer be linked to its debt situation. "This is of particular importance for development in Africa," added Mr Howe. In South Africa the Accelerated and Shared Growth Initiative aims to halve poverty and unemployment by 2014, a year before the target date of the Millennium Developmental Goals. Through AsgiSA, the South African government also aims to attain 6 percent economic growth by 2010. The government has also put in place other job-oriented interventions to address extreme poverty including the labour intensive Expanded Public Works Programme, the Agricultural Starter Pack Programme and the Comprehensive Agricultural Support Programme.

UN Observer Shocked At State of Country's Housing
United Nations special reporter for adequate housing Miloon Kothari has criticised SA's housing policy, saying there appeared to be an increasing gap between delivery of housing and legislation -- which could affect development.
Kothari said April 18 that preliminary impressions after visiting Northern Cape, Limpopo and Gauteng were that policy at national level, such as the social inclusion policy, was not filtering down to local government, and so increasing segregation. Speaking after talks with 11 non-governmental housing organisations in Johannesburg, he said: "Some of what I have seen was worse than I expected." Kothari was shocked at some of the living conditions of Johannesburg's inner-city poor, which he saw during a visit on Tuesday, particularly those living in buildings where water had been cut off. "I do not accept the argument that these buildings used to be privately owned so the municipality can wash its hands of ultimate responsibility for residents. A visit to properties owned by the Johannesburg Social Housing Company suggests there are problems with implementation. Joshco and Johannesburg Water are public companies. Who is monitoring these companies and projects to ensure delivery? It should be the municipality," said Kothari. He said non-governmental organisations in developing countries, such as India, where he is from, were jealous of the progressive standards in SA, and the fact that the right to housing was enshrined in the constitution and in judgements of the Constitutional Court. "This is sufficient ground for policy that ensures the rights of the most vulnerable are protected." Segregation between the rich and the poor was increasing, he said. "The implementation gap as a preliminary observation seems to be growing instead of narrowing and that is where I will be looking and trying to find ways to reverse that trend." Kothari said cities such as Johannesburg were finding themselves caught between trying to encourage growth and development in order to compete globally, and the protection of human rights. Presentations were made by a number of organisations including the Centre for Applied Legal Studies: Water Rights division, the Landless People's Organisation, the Inner City Resources Centre and Social Surveys Africa. Representatives from people who have been evicted or are facing eviction also made presentations. Some of the issues raised were the lack of consultation by the government when it came to moving people living in informal settlements to new areas and consideration of the needs of the community concerned. Jean du Plessis of the international Centre on Housing Rights and Evictions said that "using eviction as a tool of development (which was a global trend with China leading the way) did not promote development among the poor". 

South Africa Cautioned On Attitude to Iran Nukes
South Africa should remain aware that there is an international lack of trust in Iran, a research fellow at the South African Institute of International Affairs has warned. The institute's Thomas Wheeler said Iran should follow the example set by SA when it dismantled its nuclear programme in 1994. Iranian President Mahmoud Ahmadinejad announced April 9 that Iran had begun enriching uranium on an "industrial scale". The Islamic republic's announcement is seen as a challenge to the United Nations (UN) Security Council, which on March 24 unanimously adopted resolution 1747 -- banning Iran's arms exports -- and gave Tehran 60 days to suspend enrichment. The country has ignored previous deadlines set by the council. The security council demands were in response to allegations by the US and some allies that Iran was using the development of nuclear power to disguise a weapons programme in contravention of the nuclear Non-Proliferation Treaty. Western nations fear Iran may divert its atomic work towards a covert military programme to build bombs. Iran denies this and says it wants reactor fuel only to generate electricity. Wheeler said SA wanted the UN resolution amended when the text was put forward for consideration in March at the security council. SA's demand was made on the grounds of Iran's right to peaceful use of nuclear energy -- a claim that has failed to dispel western suspicions in light of Iran's failure to fully open up its nuclear sites to the scrutiny of UN nuclear inspectors. SA wanted the resolution crafted in a way to de-escalate tensions and to leave the door open for negotiations to secure a sustainable, long-term solution. "Some of the proposed amendments were passed but the fact that a strict resolution was unanimously adopted is an indication of the international community's mistrust in Iran's nuclear programme," Wheeler said. Rather than just leaning towards supporting Iran, Wheeler said SA should have invited the Asian country to follow Pretoria's lead. SA, upon becoming a signatory of the Nuclear Non-Proliferation Treaty in 1994, dismantled its nuclear programme and invited inspectors on site. For Wheeler, however, Ahmadinejad's announcement is an attempt to "deflect attention from some of the serious problems he is facing". Having failed to deliver on the electoral promises of poverty eradication, job creation and economic prosperity that earned him victory in the 2005 presidential elections, Wheeler said, Ahmadinejad had "gone demagogic" in a bid to rally support. Although the Iranian leader was under strong internal pressure, "the sort of belligerence Ahmadinejad displays towards western powers is just demagogic," he said. Poor performance at the helm of Iran has come at a very high cost for Ahmadinejad, who lost local government elections in December 2005. There were also parallel elections held to select members of the Assembly of Experts, a conservative body of 86 senior clerics that monitors the supreme leader and chooses his successor. 

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AUTOMOBILES

New Players Aid Market Growth in Vehicle Sector


March sales figures added once again to the continued growth in the light commercial vehicle market, with year-to-date sales rising 14%. In addition the year-to-date growth in export sales has jumped to 37,7%, which bodes well for the manufacturing sector catering to this particular international market. The leader was Toyota, with the Durban plant producing 3881 Hilux models for export under the Innovative Multi-purpose Vehicle programme. Locally Toyota also dominated the overall light commercial vehicle market with sales of 5436, again with the Hilux range topping the log, although this includes the various lifestyle models as well as the trusty workhorse vehicles. General Motors and Ford continue to battle things out in the half-ton segment, where the Opel Corsa Utility just edged out the Ford Bantam for top spot with figures of 2136 and 2100 respectively. Then of course there is the Nissan 1400, which is still showing strong sales with 1024 finding their way to customers last month. Speculation continues regarding the replacement for this traditional workhorse, but Nissan has previously stated that there will only be a replacement late next year. Whereas Nissan is continuing to do extremely well with its Hardbody and Navara models, it seems things are a little slow for the Patrol Pick-up. Sales of just 16 models last month show the model has a great deal of catching up to do if it is ever to overtake the legendary Toyota Land Cruiser Pick-up, that even with a new model on its way still saw 158 arrive on SA's roads last month. When it comes to panel vans, the Toyota Hi-Ace and Quantum definitely rule the roost and it seems that consumers are ignoring the influx of models from other historically competent, and occasionally more exciting, manufacturers. While 687 Quantum models reached customers last month, just 23 Opel Vivaro models, 57 Nissan Primastar's and 26 Volkswagen Panel Vans became the van of choice. Reasons for this will vary, from limited availability to functionality and pricing, but it would be nice to know that we are at least considering thinking out of the box. It would certainly appear that when it comes to budget models then price is the only overriding factor. Dealers sold 304 Chana Star vehicles in March, showing that cheap, reliable transport solutions will be a major draw card for the industry in coming years.

Chinese Aim for Large Slice of SA

The DFM Mini Truck is one of the latest Chinese vehicles to arrive on the local market, although its strained attempt to look like a BMW will not appeal to all in the styling stakes. An onslaught of Chinese-made vehicles has been saturating the South African market in alarming numbers recently, following a tremendous demand for low-cost commercial vehicles. Chinese vehicle manufacturers have their eyes firmly set on the South African commercial market, with further prospects of expanding into African countries. China Motor Franchise group (CMF) is embarking on importing and marketing Chinese vehicles such as Fudi and DFM in order to achieve a 10% market share in 10 years. Under the CMF commercial vehicles umbrella, four models will be available from the DFM stable, which will come equipped with 1.3l engines that push out 50kW. The DFM Mini Truck will feature an 800kg payload capacity, which should find favour with office removal companies and small construction entities. The three-quarter ton Mini Truck is set to retail at R69995. Included in the model line-up is a multi-purpose vehicle (MPV) in the form of the DFM Mini MPV, which is said to be both functional and versatile. It's copious interior is ideal to cater for small businesses such as delivery services and catering companies. The people carrier, the DFM Star Passenger, is said to address a family's travelling needs in an economical vehicle solution, as it offers seating for six passengers and is also powered by the 1.3l engine. The Fudi Lion pick-up is available in both double and single cab configurations, and is powered by either a 2.2l petrol or a 2.8l diesel engine. With the entry-level single cab model pricing is expected to be R89995. In addition to the DFM and Fudi range, CMF will also introduce a half-ton pick-up aptly named City Blitz retailing at R59995. Additionally, there will be a 1,8-ton multi purpose commercial vehicle (MPCV), which features a versatile drop side cargo box fitted with a tipping mechanism. Additionally, the medium commercial front will be spearheaded by the AW Series of medium-duty trucks, a proven range of three-ton workhorse vehicles that are currently available on SA roads and have managed to gain a 10% market share within its segment since its arrival. For the new model line-up, CMF will ensure that the dealership network offers first-class service and quality parts, with a network comprising of stakeholder-based franchises. CMF will be the sole banner involved in distributing and marketing both DFM and Fudi vehicles.

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BLACK ECONOMIC EMPOWERMENT

Manuel's Criticisms Stir BEE Controversy

Finance Minister Trevor Manuel has set the cat among the pigeons with his remarks that the government's black empowerment policy was flawed and needed reviewing. Speaking to the Financial Times, Manuel said the legislation, passed four years ago, was being abused. He said: "There were all kinds of things that businesses have done, good and bad, cynical and genuine." Manuel said some companies were merely electing black people as tokens and cited a story of his friend saying: "They (his white partners) say, 'We want you there. You are a good man. But actually we do not need you close to what we do. We will run the business, but we have bought an insurance policy through you'." Colin Reddy, director of research company BusinessMap Foundation, said he was surprised Manuel had aired such views to the media. Reddy said it was big corporations that had control of how empowerment was implemented and redesigning the black empowerment policy would not achieve much. Empowerment rating agency EmpowerdDex said Manuel's comments were mainly related to the ownership and management portion of the empowerment scorecard. These two elements had traditionally been referred to as narrow-based empowerment and they benefited the fewest black people, it said. "We believe that there is no need to review the policies yet as the codes were gazetted only this year, and only through implementation by the companies will we know what works and what doesn't. The codes themselves cater for this as the trade and industry minister can review them on an ongoing basis. To say they do not work at this time would be a bit premature," EmpowerDex said in a statement. President Thabo Mbeki's brother, Moeletsi Mbeki, said April 10 that nothing would come out of Manuel's call for black economic empowerment to be reviewed, and dismissed it as just talk. Reddy said Manuel's statement was actually questioning the degree of control policy makers had in a free market system. "In a capitalist environment, it is unavoidable to have a concentration of ownership in the hands of a few individuals who have money," said Reddy. He said the government could not assume direct control of the implementation of empowerment and still have a free economy. "Unless the government wants to move towards socialism, I don't see policy makers having more control. Also, if the government is seen to be interfering in business, that would scare off foreign direct investment. It is a catch 22 situation," said Reddy. Independent analyst Siyabonga Mahlangu said there might be flaws in the implementation of BEE, but these would be corrected along the way. "Empowerment is an ongoing process, and the policy is fairly young. The minister is calling for checks and balances, but these will be put in place as we move along," said Mahlangu. He said empowerment should be viewed holistically and not merely as equity stakes in big companies. Stephan van der Walt, analyst at financial systems company Bravura, said the abuse of the BEE system was partly due to pressure on firms to comply. "I would like to see more broad-based empowerment transactions that do not involve the usual suspects," said Van der Walt.

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EMPLOYMENT

Job Creation 'Hits 20,000 a Month'

About 20,000 formal jobs a month were created in SA last year, or 240,000 in the year as a whole -- a 2,9% increase in employment growth, according to the fifth South African Employment Report, released April 25. The report estimates total formal-sector jobs, excluding ones in agriculture, at 8,663-million. The report's estimate is marginally higher than that of Statistics SA's quarterly employment survey, which estimated the total number of people employed in the formal sector to be 8,2million -- about 750,000 more than the previous quarterly survey's figures indicated. The quarterly survey number is very similar to the 8,3-million that the Labour Force Survey (LFS) shows as the number of formal-sector workers, suggesting the numbers are credible. Analysts estimate that the country needs to create half-a-million jobs a year to start tackling unemployment, which is officially at 25,6%. The latest LFS figures from Statistics SA show a gain of 544,000 jobs in the year to March, but these jobs include the agricultural or informal sector. The "expanded" definition of unemployment, which includes those who have given up looking for jobs, fell to below 39% from a peak of over 40% a few years ago. Mike Schussler, who compiled the South African Employment Report on behalf of trade union the United Association of SA (Uasa), said: "An increasing number of South Africans are becoming self-employed and the highest number of unemployed people are those with grade 11." In September 2002, nearly one out of every seven people working were self-employed. This rose to one in every six by September last year. The number of overall self-employed has grown 28,8% since September 2002. According to the report, one in four white males, one in five Asian males and one in five black females are self-employed, while there is a growing tendency among white females (one out of six) to work for themselves. It shows 86,8% of all black self-employed people are in the informal sector. "The challenge is to make it possible for those in the informal sector to graduate into the formal sector," Schussler said. "The second tendency is that significantly more people have now completed primary school. But the problem is that many people who can't find employment are those who passed grade 11 and then left school," he said. Their unemployment rate is the highest, at 36,3%, compared with 3,2% for those with a degree or more. People who completed primary school education but left high school before matric had a higher rate of unemployment than those who did not go any further than primary school, Schussler said.

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FOOD & DRINK

SABMiller Toasts Global Thirst for Beer

The world's thirst for beer has boosted SABMiller's lager sales volumes 23% from 176-million to 216-million hectolitres for the year to March. Nigel Fairbrass, head of communications for SABMiller in London, said the calculation of the group's organic growth included volumes for South America from October 12, a year after it became part of the group. In SA, lager volumes for the year increased 23% from 26-million to 32-million hectolitres, with fourth-quarter growth of 8% benefiting from the hot weather. Fairbrass said the loss of the Amstel brand last month had not had an effect on the current-year performance. Soft drinks volumes for the year are up 7% from 13,7-million to 14,6-million hectolitres, boosted by a 33% increase in the final quarter following an improvement in the supply of carbon dioxide. Fairbrass said the carbon dioxide shortage had not been entirely resolved, but the situation had improved somewhat. In Europe, lager volumes grew 11% from 36-million to 39-million hectolitres, with the final quarter up 15%. SABMiller attributed this to continued good performances from Poland, Russia and Romania. "Poland achieved strong growth of 13% notwithstanding challenging comparatives, reflecting particularly strong market execution and good growth of our Zubr brand," said Fairbrass. Russia recorded volume growth of 24% with Romania up 23%, driven by the Timisoreana brand. Czech Republic was up only 1%, led by the Pilsner Urquell and Kozel brands. Fairbrass said Africa and Asia delivered growth of 27% in lager volumes, reflecting strong growth in China of 30% driven by the national brand, Snow. Fairbrass said in India, volumes increased 36% on a pro forma basis, benefiting from market deregulation in certain states. South American lager volumes rose 12% with growth accelerating in the final quarter to 14%. Fairbrass said strong performances across the region reflected good economic conditions, improved market shares and the effect of initiatives to rejuvenate the beer industry. These initiatives, he said, included brand renovations and launches, the introduction of new containers and increased investment in marketing and merchandising at the point of sale. In Central America, carbonated soft drink volumes were up 6% and lager volumes up 8%. In North America, sales to retailers declined 3% from 47-million to 45,6-million hectolitres, he said.

Coca-Cola Africa Pumps Up Volumes

Strong growth in Coca-Cola Africa's largest markets in Africa -- SA and Nigeria -- contributed to the beverage company's first-quarter performance, with the group posting a 12% increase in revenue to $1,276bn, from $1,140bn in December last year. Unit case volumes (cases of 24 units) were also up 17% from 1,4-billion to 1,6-billion. Global volumes were up 4% from 21,4-billion to 22,2-billion unit cases. Alex Cummings, president and chief operating officer of Coca-Cola Africa, said the revenue growth reflected a 16% increase in concentrate sales, positive pricing and mix, partially offset by an unfavourable double-digit currency effect. "Operating income growth of 9% reflected the increase in net revenues and the continued investment in key marketing initiatives," said Cummings. SA's unit case volume grew 29%, compared with a 3% decline in the first quarter last year. The company said that the growth was driven by strong marketing, the replenishment of trade inventory -- which had been low due to the carbon dioxide shortage in the fourth quarter last year -- and favourable weather. Nigeria's unit case volume increased 18%, compared with an 11% rise previously. "This is a strong quarter and a strong start to 2007. "We grew both sparkling and still beverages. "Our focus on driving growth, building our innovation pipeline and managing our productivity is working," said Cummings. "However, these impressive results are the product of just one quarter and we must remain focused on delivering sustainable growth into the future." Coca-Cola Africa is the continent's soft-drinks leader, serving 925-million consumers through 900000 retail outlets throughout 56 countries. Every day, about 93-million Coca-Cola products are sold across Africa. Cummings said Coca-Cola Africa, together with its 40 bottling partners, was the continent's largest private-sector employer in the consumer goods industry, with 55000 employees. "Over the past five years, we have invested more than $600m in Africa, with much of this going into new plants, updated equipment and advanced employee training," said Cummings.

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FOREIGN DEBT

Municipalities R40 Billion in Debt

South African municipalities are R40 billion in debt, a Local Government Association report has revealed. The shocking figures were detailed at the Salga national conference in Midrand. The hard-hitting report slams politicians for their "backward tendency" of appointing inappropriate people to positions within local government. It says this means they are forgoing capacity, skills and expertise "in favour of purchasing a patronage network within the council of loyal but largely incompetent officials". It highlights the heavy impact that staff shortages and the lack of skilled and experienced personnel have on service delivery. "This results in continuous crisis management, with no time available for proper planning, personnel development and term planning." The document warns that this affects vital areas, such as the quality of water and effluent not being maintained to required standards. The report finds that municipalities are battling to contain debt levels "within acceptable norms" and points to water debts as a particular concern. Municipalities are not able to easily disconnect supplies because water is constitutionally protected as a basic necessity. During his address, Salga chairman Amos Masondo said he was concerned that a year after the local government elections, some municipalities had yet to finalise the appointment of municipal managers and other key personnel. There were also vacancies for key jobs across provinces, which were closely linked to failures to complete employment contracts and performance agreements. Masondo told delegates that although the 50/50 campaign had ensured the proportion of women elected had jumped from 29% to 48%, this had to be complemented by the appointment of senior women managers in various municipal administrations. Women made up only 12% of managers in the Free State, 16% in Mpumalanga, 25% in Limpopo and 30% in the Eastern Cape. Masondo highlighted the un-rest in Khutsong on the West Rand, resisting incorporation into North West. He said Salga was committed to engaging with communities and "appropriate structures" to find a solution. The North West government condemned the use of violence by Khutsong residents April 23.

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FOREIGN RELATIONS

SADC Tariff Deal With EU Now 'Unlikely This Year'

A recent update on trade negotiations between the European Union (EU) and African, Caribbean and Pacific (ACP) countries, hosted by the South African Institute of International Affairs, has exposed some stark contrasts. The EU is negotiating economic partnership agreements (EPAs) with these nations to replace the Cotonou agreement, which is incompatible with World Trade Organisation (WTO) rules. A waiver on the agreement expires at the end of the year. If negotiations are not finalised by then, or if the waiver is not extended, some countries' trade with the EU will be governed by the stricter generalised system of preferences. Junior Lodge, the Caribbean regional negotiating representative in Brussels, describes negotiations that have made considerable progress. Caribbean countries are eager to conclude an agreement and have almost acted with "undue haste," he said. Aiming to lock in substantial benefits for their economies, they have made minor concessions, while pushing for optimum leeway from the EU on implementation periods for concessions on market liberalisation. Transition periods of up to 25 years have been mooted. The tactic is working for the Caribbean. Lodge says a draft text for the agreement already exists but it needs some tweaking. There are a few sticking points -- notably on development co- operation and tariff liberalisation -- Caribbean countries expect to conclude an EPA by September. A long journey lies ahead for the Southern African Development Community (SADC) countries. Despite the deadline, SADC members and the EU have yet to have a proper, formal negotiating session, says Paul Kalenga, trade policy adviser with the Regional Trade Facilitation Programme and SADC secretariat. This body appears to be at odds about what and how much it wishes to give. Observers have even hinted that they may not united at the negotiating table. The likelihood of a deal before the end of the year appears remote, says Kalenga. Further complicating the negotiations is a request from SADC in March last year that SA be included. The EPAs are broadly punted as trade deals with a development aim -- a framework into which SA does not neatly fit. It took exactly a year for the EU to process the request and finally agree to SA's inclusion -- further delaying the crucial talks. SADC argues that SA's inclusion will boost regional integration and help smooth the way for greater trade harmonisation in the region. Some of the role players have accused SA of seeking to enhance its own access to EU markets while obtaining a greater measure of protection for its market by piggybacking on the EPA. The regional integration argument also seems an ill-fitting jigsaw. All the members of the Southern African Customs Union are now included in a single EPA configuration, which is an important milestone. However, some SADC members are negotiating an EPA separately with the eastern and southern African group, while the Democratic Republic of Congo has slotted in with the central Africa negotiating bloc. The EU attaches some important conditions to SA's inclusions, calling for differential treatment of Africa's economic powerhouse. Its caution is understandable. The EU recently indicated it would dismantle all tariffs and quotas, offering full market access to ACP countries, excluding SA. Had it extended that offer to SA, it would have created a situation where the EU would open its markets to SA while some tariffs that had already been abolished under a trade, development and co-operation agreement governing SA's trade with the EU, would have to be reinstated on some EU goods entering SA -- clearly a reversal that EU bureaucrats are unlikely to be able to sell at home. SA is also unwilling to negotiate on new generation issues - or services - which include trade issues such as government procurement, investment, transport and telecommunications. SA cites the absence of these on the multilateral trading agenda. SA's presence at the EPA negotiating table appears to have hardened the EU's stance on the matter, which could force a stalemate, preventing the December deadline being met. It may be argued that SA's negotiating capacity may help its weaker neighbours in the region to conclude a fair pact. It could, however, hurt them if SA's strong-arm approach prevents the deadline being met. Namibia, Botswana and Swaziland, in particular, stand to lose. In the absence of an alternative system to govern their exports with the EU, the stricter generalised system of preferences will become the guideline, says Kalenga. If these duties are applied, countries in southern Africa, not defined as least developed countries, face tariff hikes, or the imposition of tariffs, where none existed under the Cotonou agreement. Least developed countries would be unaffected, enjoying duty-free access to EU markets. SA's trade relations with the EU are defined by a bilateral agreement since 2000. If the EPA is concluded, SA will see some real benefits, the EU has indicated. But if the EPA is not concluded, SA will suffer no disruption, with its trade with the EU continuing under this agreement.

Developing States Need Trade Talks to Succeed

United Nations Secretary General Ban Ki-moon warned April 23 that the current round of international trade talks must succeed, or the world's poorest countries will slip further behind. Addressing the Seventh Forum on Democracy, Development and Free Trade, in Doha, Qatar Mr Ban said the entire multilateral trading system will be in jeopardy should the new round of talks fail. Named after the city where they were launched in 2001, the Doha Round of trade talks stalled last year amid disputes between developed and developing countries over agricultural subsidies, but talks have resumed recently. Mr Ban warned that if the latest talks fail, "serious damage will be done to those who can least afford it, to the multilateral trading system, and to multilateralism itself. "Should this round of trade talks succeed, Doha will become synonymous not only with free trade, but also indelibly linked to development." The Secretary General urged UN member states to re-double their efforts to reach agreement regarding sensitive issues in the realm of international trade, such as agricultural subsidies which benefit farmers in developed nations and effectively price-out farmers in emerging economies. "The global trading regime needs to create opportunities for the poorest countries, instead of leaving them at a disadvantage," said Mr Ban. The Secretary-General told the forum that while democracy was intrinsically valuable on its own terms, it also brought positive effects to trade and development. In so doing, he explained, democracy also offered institutional certainty and stability and encouraging businesses to have greater confidence in a country's economic outlook. "Democracy, development and free trade share a conception of men and women as free and autonomous individuals, capable of fulfilling their inner potential," he said. Mr Ban further urged the world's countries to work towards "truly free trade," transparent governance and institutions based on the will of the people, and sustainable development and globalisation that benefits everyone, and not just some of the world's peoples.

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INDUSTRY

Coega Industry Zone Lines Up Investors

The success of the Coega industrial development zone in luring investors has led to its decision to expand its land area by about 63% to 18000ha. Coega Development Corporation (CDC) CEO Pepi Silinga said mid-April that an in- principle agreement had been signed to acquire 7000ha of land from PPC. The purchase price is not being disclosed at this stage. "At the rate at which we are growing we might run out of space in 10 years," Silinga said in an interview. The land acquisition would eliminate profiteering on land and allow the CDC to benefit from the projected growth in land prices. In the year to March, the Coega industrial development zone succeeded in almost meeting its target of securing 10 new investors, bringing in nine for the year. These included the R20bn Alcan smelter, and investments by Dynamic Commodities' fruit sorbet facility (R50m); Cerebos' salt production plant (R85m), Biomass Pellets (R70m); an automotive components manufacturer (R50m); a precast products manufacturer (R50m); and three logistics projects with a combined value of R180m. Another target of 10 new investors had been set for the current financial year. About R28bn has been invested in or committed to the zone which should see about 9000 workers on site by the end of next year as construction of the Alcan smelter, port infrastructure and other projects gets under way. CDC spokeswoman Vuyelwa Qinga-Vika said lease agreements would also be signed on completion of environmental impact assessments for a $20bn agro-processing project by SeaArk; a R1,1bn thin strip mill investment from Germany; and a R5,8bn joint venture by Chemicals Industries Far East Limited of Singapore and South African empowerment partners in a chlorine refinery and desalination plant. The chemical plant is to be officially launched next Monday by Singaporean President Sellapan Ramanathan during his state visit to SA. Construction was due to begin in June, Qinga-Vika said. Another major project in the pipeline is the plan by Russian company Renova to construct a ferroalloys smelter to process Kalahari manganese.

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INFORMATION TECHNOLOGY

ICTs to Alleviate Poverty

Information and Communication Technologies (ICTs) should be used to develop the brainpower needed to pull Africa out of poverty, says President Thabo Mbeki. Addressing the unveiling of the New Partnership for Africa's Development (Nepad) e-Schools Demonstration Project April 17, President Mbeki explained the project aimed to change the continent for the better. "This project is about helping our young ones to acquire knowledge and the capacity to use their brains to change our country and continent for the better," he said at the Maripe Secondary School. The initiative aims to provide a continental learning mechanism, based on real-life experiences of implementing ICTs in schools across Africa. This will inform the broader Nepad e-Schools Initiative roll out. The Nepad Heads of State and Government Implementation Committee (HSGIC), in 2003, adopted the initiative, aimed at ensuring African youth graduate from schools with the skills to participate in global ICTs. The demonstration project is being rolled out in six schools in each of the eight participating African countries, namely Egypt, Ghana, Kenya, Lesotho, Mauritius, Rwanda, South Africa and Uganda. Another 12 countries are to roll out the project later in the year. Each school is equipped with a computer laboratory containing at least 20 personal computers, a server and network infrastructure, as well as peripherals such as scanners, whiteboards and printers. In South Africa, Maripe Secondary is one of the six schools that will benefit from the project. Other schools are Isiphosethu High in KwaZulu-Natal, Hendrick Makapan in North West, Lomahasha Secondary in Mpumalanga, Thozamisa High in Eastern Cape and Ipetleng Secondary in Free State. While President Mbeki noted that poverty was still prevalent in many areas of the country and the continent, he said it was about time people stood up to empower themselves. Deputy Chairperson of the NEPAD e-Africa Commission Henry Chaisa, said the project aimed to ultimately create a critical mass of African youth with ICT skills. "In these days, people need such skills in order to conduct business," Dr Chaisa said. He said the project would go a long way in terms of narrowing the digital divide between the continent and others such as Europe, America and Asia, which are considered more technologically advanced. Communications Deputy Minister Radhakrishna Padayachie said the project would be vital in the fight against the marginalisation of Africa in the global economy. "The project will provide our learners with the necessary skills so that they can become productive in the economy," he said. Education Deputy Minister Enver Surty said for the project to be a success, educators would need to be re-skilled and re-educated. "Its not only about computers, we will need to re-skill and re-educate our teachers so that the skills can filter down to the learners," he said. At the moment the roll out is still at a pilot stage, in a bid to uncover any challenges that could hamper the broader implementation of the programme. The ultimate aim is to roll out the programme in about 600 000 schools across the entire African continent over a period of 10 to 20 years. 

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INTERNATIONAL ECONOMIC RELATIONS

South Africa Niger to Address Trade Imbalances

South Africa and Niger are to expand the variety of goods traded between them, in order to address the huge trade imbalance between the two countries, in South Africa's favour. This emerged April 18 following a meeting between the two countries' Foreign Ministers Nkosazana Dlamini-Zuma and Aichatou Mindaoudou. Top on the agenda of the meeting was the strengthening of bilateral political and economic relations between the two countries. The meeting took place within the context of South Africa's commitment to consolidate such relations with Niger. Briefing reporters following a meeting, Dr Dlamini-Zuma said all available opportunities on trade would be looked at. "As we are trying to improve our co-operation, we will find goods to buy from Niger and they will also find things to sell to us," she said. Figures provided by the Department of Foreign Affairs indicate that South Africa exports more to Niger than it imports, creating a huge trade deficit for the West African country. According to the department, South Africa exported goods in the region of R54 million to Niger in 2006 and imported only about R2 million, resulting in a shortfall of about R52 million. The figures also show that this trend dates a few years back. Dr Dalmini-Zuma said a part of the process to remedy the situation would be to send delegations from South Africa to meet with representatives of trade and industry, transport and minerals and energy sectors in Niger. A specific project earmarked to boost Niger economically, is the development of an abattoir for meat processing and the production of milk as well as dairy products. "We have quite a full plan in terms of what to do and are happy that we have been able to take one more step to take off with all these projects," Dr Dlamini-Zuma said. "We will be exchanging delegations very frequently in order to take these projects forward." She added the two countries were in the process of finalising the establishments of embassy missions to further strengthen their bilateral relations. Ms Mindaoudou said Niger would need South Africa's experience in many fields in order to improve its economy. "South Africa has a lot of experience in different fields and Niger has a lot of potential and capacity in the same fields, especially the cattle breeding sector," she said. The agriculture sector is critical to the Niger economy since about 90 percent of that country's labour force is engaged in mostly subsistence agriculture. The sector contributes over 50 percent of Niger's Gross Domestic Product.

Singapore Can Strengthen Africa-Asia Links

Singapore could help strengthen relations between African regional organisations and the Association of Southeast Asian Nations (ASEAN), says President Thabo Mbeki. Addressing a state banquet in honour of Singaporean President Sellapan Ramanathan April 19, President Mbeki said this was important as Singapore is about to chair ASEAN. "I am confident that Singapore ... will strengthen the relations between our regional organisations so that our countries and peoples can derive more benefit from closer co-operation." Regarded as Southeast Asia's wealthiest nation, Singapore will assume the chairmanship of ASEAN later this year. ASEAN is a geo-political and economic organisation made up of about ten countries located in Southeast Asia. It was formed in 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand as a display of solidarity against communist expansion in Vietnam and insurgency with their own borders. ASEAN aims to accelerate economic growth, social progress, cultural development among its members and the promotion of regional peace. Brunei, Vietnam, Laos, Myanmar and Cambodia later joined as members of the organisation. In 1992 the member-nations of the organisation signed a Free Trade Area (FTA) agreement, allowing the nations to exchange goods without tariffs, quotas and preferences. President Mbeki said while Singapore was committed to regional unity and development in Southeast Asia, South Africa was also doing the same within the African Union (UN) and South African Development Community (SADC). "Our two countries share a vision of peaceful, stable and democratic world," he said. He added that together with other countries of the south, South Africa supported the reform of the United Nations (UN). "We want the further strengthening of this world body so as to better discharge its mandate to ensure peace, security and development in all parts of the world," President Mbeki said. He added that South Africa was inspired by Singapore's contribution towards the achievements of such ideals during its two-year term as a non-permanent member of the UN Security Council (UNSC), which ended in 2002. South Africa, which is currently a non-permanent member of the UNSC, would follow in Singapore's footsteps, said president Mbeki. The visit by President Nathan, accompanied by a 22-member business delegation, is the first by a Singaporean head of state to South Africa. There were discussions with the President Mbeki on strengthening of bilateral political, economic and trade relations between the two countries. The Southern African Customs Union (SACU) is looking at a proposal for South Africa and Singapore to have a free trade agreement, President Thabo Mbeki said April 19. President Mbeki said South Africa wanted to have such an agreement with Singapore, but added that there were processes to follow. "We as South Africa want this free trade agreement with Singapore but we are members of the Southern African Customs Union," Mr Mbeki said "Other countries like Namibia, Lesotho and Botswana are part of that, so, to engage in such a process requires the agreement of the customs union." This was a matter receiving "urgent attention" from SACU said the president, going on to explain that in the context of a free trade agreement, concerned countries could agree to eliminate tariffs, quotas and preferences on most if not all goods traded between them. 

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MINERALS AND METALS

New Terminal to Boost Ferrochrome Exports

A $4 million (approx R28 million) construction project is to boost the export of ferrochrome between South Africa and Zimbabwe. The construction of the ferrochrome terminal at the Maputo Port in Mozambique is scheduled to be completed in June. "The bigger ferrochrome terminal would boost ferrochrome exports to more than one million tons per year over the next few years," said Dick Moore, commercial director of the Maputo Port Development Company (MPDC). "So we are very pleased," he said. Ferrochrome is a corrosion-resistant alloy of chrome and iron and is used to produce stainless steel. In South Africa it is mined in Middelburg and Rustenburg. Mr Moore said the new facility would be fully operational by the end of July. "The original terminal at Maputo Port was commissioned less than two years ago and was already operating close to capacity," said Brenda Horne, Chief Executive Officer of the Maputo Corridor Logistics Initiative (MCLI). "The terminal handled more than 500 000 tons in 2006, which was mainly shipped to the steel mills of Northern Europe, Japan and China," she said. The MCLI aims to improve trade and infrastructure like the road and rail link between South Africa and Mozambique as part of the Maputo Development Corridor (MDC) initiative. The MDC initiative was spearheaded by former Mpumalanga Premier Mathews Phosa. It has already resulted in the construction of the R2 billion N4 toll road between Johannesburg and Maputo harbour, as well as linked rail and communication upgrades. The MPDC has a 25-year concession from the Mozambican government to operate Port Maputo. Furthermore, the Industrial Development Corporation (IDC) has been used by the government of South Africa as the primary catalyst for South African investment in Mozambique In March 2007, the IDC has approved funding for 10 projects geographically spread throughout Mozambique and is currently considering and investigating six additional projects in the country. The spread ranges from mining and mineral beneficiation, agriculture, tourism, chemicals, and forestry, transport infrastructure to energy. The Mozal Aluminium Smelter (Mozal 1 and II) remains the IDC's largest investment outside the borders of South Africa. Another major project funded by the IDC is the titanium-bearing mineral sands in southern Mozambique totals $600 million (approx R4.2 billion).

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MINING 

Gold Fields Shines On Talk of US Buyout Bid

Market interest in Gold Fields surged April 11 after media reports that little-known US financier Edward Pastorini could lead a group of five gold mining companies bidding for the group. Gold Fields shares gained as much as 11% to a peak of R152,50 after the reports, but gave up much of the gain to close up 3,5%. Bloomberg, citing internal documents and an interview with San Francisco-based Pastorini, said Pastorini planned to accumulate a stake of about 10% in Gold Fields by June or July before making an offer in cash, shares and bullion dividends. The basis of his offer was his belief, shared by private equity firms and corporate raiders, that gold would rise to more than $1000/oz in the next two to three years, he told the news agency. If it materialises, this would be the second bid for Gold Fields in three years, after Harmony Gold Mining launched a R24,5bn hostile bid in 2004, which eventually fell through because of a high court ruling. The disclosure of Pastorini's strategy, which would inevitably drive up the price of Gold Fields, is curious, as is the fact that Pastorini is unknown to seasoned investors. Gold Fields head of corporate affairs Willie Jacobsz said Gold Fields had never had any contact with or heard of Pastorini. Cadiz African Harvest Asset Management fund manager Peter Major said this could be a genuine intention to bid, which was not intended to be leaked to the market, by an entrepreneur who had spotted an opportunity in the rising gold price environment. On a more cynical view, it could also be a strategy -- by an investor who had bought Gold Fields shares at R113,50 in its recent capital-raising -- to drive up the price in the short term and no bid would materialise. Major thought the second possibility was less likely. Gold Fields head of investor relations Nerina Bodasing said that after Gold Fields' recent capital raising, volumes of trade in the shares had increased but Gold Fields had not noticed any particularly unusual activity. The group's biggest shareholders, with just under 10%, were Capital Research & Management, followed by Old Mutual Group and Black Rock Investment Managers, both with about 7%. Gold Fields had heard rumours about a potential bid but had been unable to verify them, Bodasing said. As no formal offer had been received, Gold Fields could not comment on any steps it might take. In principle, Gold Fields was not opposed to a bid as long as it offered value to shareholders. 

Harmony Gold, Uranium Riches to Start Tumbling in

Harmony Gold Mining's growth prospects are looking more certain now, as several new mines that have been under development for years are due to start producing shortly and rapid progress is being made on establishing the economic viability of its uranium resources. Speaking at the group's March quarterly results presentation April 25, CEO Bernard Swanepoel said that by June the first gold should be produced from the Tshepong Sub 66 Decline and by September the three-year build-up at Doornkop would start to show results. By the middle of next year, Phakisa would deliver its first gold. The Hidden Valley mine in Papua New Guinea was on track to pour its first gold in November next year. The company said next year capital expenditure would increase by about R1bn because the main costs of building Hidden Valley would be incurred. Swanepoel also described himself as "excited" about the prospects for the group's uranium resources, which are contained in about 56 tailings dams. Of those, about five dams in Randfontein and six in Free State have been prioritised. Harmony is on track to deliver a pre- feasibility study on the resources by June. Harmony's Cooke dump alone contains an estimated 25-million pounds of uranium which at the current price of $113/pound would have a net present value of about R3,7bn. It also contains gold, which at the current gold price of about R151000/kg would have a net present value of about R211m. Harmony estimates it could recover about 54% of the uranium and 35% of the gold over the dump's 10-year life, using simple conventional technology. The capital cost for a gold flotation plant would be about R100m and for a uranium plant about R750m.

De Beers Bemoans Political Demands and Supply Shortage 

De Beers, the world's largest diamond supplier, says it is being increasingly constrained by supply shortages and political demands in southern Africa. In a recent letter to clients, De Beers' Diamond Trading Company (DTC) warned of reduced supplies, notably in SA, as a result of increasing pressure from other producing countries to supply their own local industries. It also warned clients in SA that supply of better-quality two- carat and larger goods would be constrained by De Beers' relatively limited production of this size range, which it said was "substantially" below the current purchases by South African-based clients, or sightholders. The company's difficulty was in meeting the ambitious targets of governments in southern Africa and executing them with a global client base of 93 sightholders and limited supplies. In SA, the challenges appear to be intensifying as De Beers has less goods available with the recent closure of Cullinan and Namaqualand. At the same time, the government is putting in place a state diamond trader body, which would be offered a proportion of its production for local diamond cutters in accordance with the new legislation. The letter also focused on the need for clients in SA to start manufacturing a wider range of rough diamonds profitably by enhancing their manufacturing technology. "South African-based clients need to consider how they can profitably take a broader range of goods," the company said. "These objectives are unlikely to be achieved without innovative thinking around enhancements to manufacturing technology and efficiency to optimise the local manufacture of the goods being made available." DTC also said competition for supply from London, its traditional supply centre, was expected to intensify as more goods were sold through the local DTCs in southern Africa. To meet the supply challenges in SA, it said it was considering allocating only to those clients, or "applicants", that could demonstrate sufficient manufacturing capacity to handle the ranges of diamonds being sought.

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TELECOMMUNICATIONS

Nokia Siemens Networks Arrives

A corporate scandal blasting through the German giant Siemens has been resolved sufficiently to permit the belated launch of a joint venture with the Finnish company Nokia. Nokia Siemens Networks made its official debut in SA late April, three months after its expected start-up. The delay was caused by investigations into alleged bribes of $570m paid to win contracts for the telecoms division, which is the unit merging with Nokia Networks. Siemens is also under investigation for allegedly illegally financing a rival to its main union. Although the probe was not yet over, it had begun within the telecoms division so delays in the merger were kept to a minimum, said Jan Mrosik, who is heading the new joint venture in Johannesburg. Nokia had also intensified its due diligence before the new venture went ahead, to make sure it knew exactly what it was getting into bed with, Mrosik said. To emphasise its new squeaky-clean stance, the company issued a statement saying it had "zero tolerance for financial or other business misconduct and has also defined anticorruption policies, principles, and materials". Siemens is pumping 2,4bn Euros and Nokia 1,7bn Euros into the new company, which ranks behind only Ericsson in revenues for fixed and mobile networking technologies, earning a combined 17,1bn Euros in financial 2006. It serves 75 of the top 100 operators in 150 countries, and its African clients include MTN, Vodacom, Cell C and Telkom. Locally, the networking operations of Siemens massively outstripped Nokia Networks, employing 700 people compared to 50 at Nokia. Nokia Networks SA did not even have a manager after the last incumbent, Henry Ferreira, resigned a few weeks ago. That lack of high-level management clashes should make integrating the two operations easier. "We don't see any major changes in terms of management fallout," said Mrosik. "There has been no restructuring so far. In other countries where there are similar strengths the situation was different." Mrosik said the industry was in transition as new operators were licensed, fixed and mobile operators muscled into each other's territories, mobile TV and data services grew more popular, and rival technologies fought for recognition. Operators struggling to cut their costs were putting pressure on equipment vendors to bring their prices down, and only the largest vendors with economies of scale and the cash to fund research and development would flourish, he said. By 2015, about 5-billion people will have access to voice and data services, up from 2,5-billion today. Of the 2,5-million yet to be connected, at least 1-billion were in Africa and the Middle East, Mrosik said. "We believe the number of subscribers will double, but voice and data traffic will increase 100-fold by the growth in internet usage and by transferring video clips and TV across the channels," he said. SA should prove one of the most rewarding foreign subsidiaries of the new company.

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WORLD CUP

UN Teams Up With Fifa Ahead of 2010 World Cup

Ahead of the 2010 FIFA World Cup South Africa, the United Nations tourism agency is teaming up with FIFA to help promote development across the African continent. The heads of FIFA, the UN World Tourism Organisation (UNWTO) and the UNWTO ST-EP Foundation (Sustainable Tourism - Eliminating Poverty) are preparing a partnership to assist African countries within the framework of the 2010 FIFA World Cup. The partnership's aims include helping to eliminate poverty and supporting sustainable tourism in Africa by using soccer as a driving force. "The World Cup constitutes an opportunity that the countries of the region can seize in order to obtain the maximum socio-economic, promotional and cultural benefits," UNWTO Secretary-General Francesco Frangialli said April 10. "It should also contribute to strengthening the image of Africa." The UNWTO is also linking tourism with the UN Millennium Development Goals (MDGs) and its own Global Code of Ethics. The MDGs are a set of globally-agreed targets, set to be realised by 2015, aimed at eliminating a host of social ills. They include securing universal primary education, providing adequate sanitation and goals for the welfare of vulnerable women and children. The 2010 FIFA World Cup, through the assistance provided by UNWTO and with travel and tourism as its main thrust, represents an opportunity to promote the whole of Africa to international markets. It also hopes to reinforce the image of the continent as a safe and significant tourism destination and to help people develop closer relations, the agency said. Earlier this year, the African Union (AU), South Africa and Ethiopia nominated 2007 as the International Year of African Football, an initiative that was welcomed by the UN as part of its global drive of linking sport with development. Through the implementation of Legacy Projects, the South African government itself hopes to derive long term benefits from its opportunity to host the greatest soccer tournament in the world. By improving infrastructure to cater for the games, the country hopes to lay the foundation for improved facilities and services for years after the 2010 FIFA Soccer World Cup.

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