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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)

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Update No: 076 - (09/05/08)

CRISIS? WHAT CRISIS?
Following Zimbabwe's election, President Thabo Mbeki continues to face criticism for his apparent inaction, with South African opposition leaders supporting calls for him to be sacked as facilitator for talks between the parties in Zimbabwe. The intensified local criticism follows similarly strident calls from the US and Britain at the United Nations Security Council for African countries and leaders to do something about Zimbabwe and President Robert Mugabe's refusal to leave power. The leader of Zimbabwe's opposition Movement for Democratic Change, Morgan Tsvangarai, called for Mbeki to be relieved of his duties as a mediator in Zimbabwe. In one of the most scathing of the attacks on Mbeki, Democratic Alliance leader Helen Zille said, "Last Saturday afternoon (April 19) ... the presidency of Thabo Mbeki hit its lowest ebb. "The image of Mbeki holding hands with Robert Mugabe published alongside the headline 'Crisis? What crisis?' destroyed whatever credibility Mbeki still held as the chief proponent of an African Renaissance." 

Independent Zimbabwean monitors say Mr Tsvangirai gained 49% of the vote - just short of the threshold for outright victory - but more than President Mugabe. The opposition Movement for Democratic Change (MDC) says its leader gained 50.3% and so should be declared the winner. Zimbabwe's President Robert Mugabe has been under fire over March's disputed elections. His neighbours have been supportive but regional differences are now emerging. South Africa's President Mbeki is the key Zimbabwe mediator. He has refused to criticise Robert Mugabe, but the ruling ANC, and trade unions have urged him to take a stronger line. Zimbabwe opposition leader Morgan Tsvangirai was the "clear victor" of the March poll, a top US envoy says. Jendayi Frazer was speaking in South Africa, at the start of a tour to lobby Zimbabwe's neighbours to put pressure on President Robert Mugabe. 

World leaders contradicted South African President Thabo Mbeki April 16 at the United Nations, by speaking out strongly against Mugabe's attempt to 'win the count after losing the elections.' Mbeki had courted condemnation by claiming there was 'no crisis in Zimbabwe' despite his own ANC ruling party stating the opposite. A special session of the United Nations Security Council, chaired by South Africa, turned into an ideal platform for common sense to prevail. British Prime Minister Gordon Brown and UN Secretary General Ban Ki-Moon both combined to thwart Mbeki's attempt at keeping Zimbabwe off the agenda. The consensus was that the international community could no longer ignore developments in the country. Brown was blunt in his assessment saying; 'No one thinks, having seen the results of polling stations that President Mugabe has won.' He accused Mugabe of trying to 'steal' the election; 'A stolen election would not be a democratic election at all. Let a single clear message go out from here in New York that we... stand solidly behind democracy and human rights for Zimbabwe.' UN Secretary General Ban Ki-Moon threw his weight behind these sentiments saying; 'The situation could deteriorate further with serious implications for the people of Zimbabwe.' 

Fears of Recession
South Africa may be on the brink of its first recession in a decade, with a global slowdown, rising inflation and surging household debt likely to stall economic growth and a five-year bull run on the JSE, suggests private wealth manager Citadel. Such a slump would last six to 18 months, but would not spell disaster, as it would be a natural downturn for an economy that had grown steadily for nine years, Citadel investment strategists said April 8. Citadel's chief investment strategist, Dave Mohr, said: "We are probably not there yet, but there is certainly a more than 50% chance we could experience a recession at some point in the next two years. "We are very vulnerable to what is happening in the rest of the world." Mohr's comments coincided with the release of a survey showing consumer confidence fell to a four-year low in the first quarter. Interest rate hikes, rising food and petrol prices, falling house prices and rolling power cuts were all cited as triggers for the fall in consumer sentiment. Mohr said analysis of the state of the economy showed several typical causes of a recession were either prevailing or could easily appear.

South Africa plans to use the second year of its chairmanship of the United Nations (UN) Security Council to facilitate discussion between the body and the African Union's (AU's) peace and security structure. The AU structure is aimed at setting up mechanisms that would encourage the world to react quickly to Africa's conflicts. The head of multilateral affairs at the foreign affairs department, ambassador George Nene, said April 2 that two special events had been planned to ensure that the UN Security Council spent some time deliberating on new ways to help Africa avoid explosive conflict. With the mandates of the UN Mission in Sudan, which helps to support the Comprehensive Peace Agreement between the north and south of the country, and the UN Mission for the Referendum in Western Sahara expiring, South Africa would strongly support the call that the mandates of both missions be renewed.

Mining Abuses?
Alleged human rights abuses by Anglo Platinum (AP), the worlds leading producer of platinum, could spark investigations throughout South Africa's mining industry. The South African Human Rights Commission (SAHRC) said it would probe accusations by international rights watchdog, ActionAid, of forced resettlement and contamination of water supplies in communities surrounding AP's Limpopo province mines, in the north of the country. "Some of the poorest people on earth are paying a heavy price for the global platinum boom," according to Zanele Twala, ActionAid's country director in South Africa. "Communities, especially women, have lost their main means of survival - access to land and water. We believe this constitutes a violation of their basic human rights." The price of platinum has in recent months breached the US$2,000 an ounce level, the high price driven by its use in catalytic converters for car exhausts and also the jewellery market. It is estimated that AP accounts for 40 percent of the metal's global supply and the company controls up to 60 percent of all known reserves. 

Eskom Tariff Increases?
Eskom is seeking a 43 percent tariff increase in each of the next two years on top of the current 53 percent it has already applied for. The revelation, emerging from Eskom's application for the 53 percent increase, was greeted with shock April 9 by Cosatu, which is already braced for mass action over price rises including electricity tariffs. But the energy regulator insisted on that it would not give Eskom a blank cheque for future price rises. "Eskom must find ways of ensuring that there are no further hikes other than those that are really, really outside anyone's control," Thembani Bukula of the National Energy Regulator of SA (Nersa) said. 

If Eskom gets its way and electricity prices double over the next two years, inflation could breach its previous record of 11,3% in the next few months, and stay outside its 3%-6% target range until late in 2010. Interest rates would also rise again at the Reserve Bank's next policy meeting in June. Bank Governor Tito Mboweni painted a grim picture of the effect any further electricity price increases would have on the inflation outlook April 10 as he announced the Bank's decision to raise interest rates for the first time this year. "The scenario is bad ... I don't want to talk about it today, it's not good at all," he says. "I think we must focus our attention on the inflation outcomes going forward. I'm afraid I'm not the bearer of good news; I don't think things are going to be easier soon," 

Who would have thought six months ago that the strongest opposition to the proposed electricity price hikes would have come from the ruling African National Congress (ANC)? The party's role as an activist organisation, since its watershed conference last year, is also cemented by its position that there is a crisis in Zimbabwe. Although ANC spokesman Steyn Speed says the party has "always been an activist organisation", he concedes that the elective conference in Polokwane delivered the new leadership a firm mandate. " It characterises itself as a liberation movement. But Polokwane decided that the ANC needs to play a more active role," Speed says. Before Polokwane, the ANC's positions on the electricity crisis as well as Zimbabwe would have been inconceivable," Friedman says. He voices concern about whether the ANC will remain "as vocal" once new leadership takes office at the Union Buildings next year. 

Eskom's monopolistic control of the electricity transmission grid and electricity purchases needed to be broken if private sector interest was to be revived in the sector to get the troubled system back on track, the Democratic Alliance (DA) said April 7. This emerged in a party discussion document, which said no independent foreign power producer would enter the market in SA if it was subject to Eskom monopolies. Eskom has primary access to the transmission system, and is the only legally empowered purchaser of electricity. DA minerals and energy spokesman Hendrik Schmidt said his party formulated its proposals believing that their implementation would attract the investment needed for reliable electricity supply. 

Mbeki’s Zimbabwe Failures
President Thabo Mbeki was quite correct in describing the recent goings on in Zimbabwe as "a normal election process". That is the crux of the problem, and precisely the reason his refusal to use the word "crisis" is so ludicrous -- vote-rigging, prolonged delays in releasing results, arrests of opposition leaders, violence against opposition supporters, farm invasions and a variety of other undemocratic practices have become the norm in Zimbabwe. That is why there is an urgent need for regional leaders to take a firm stance against such tyranny. Such behaviour is certainly not "normal" in a democracy, and the fact that Mbeki seems incapable of differentiating is extremely concerning. On the strength of his handling of the Zimbabwe situation alone, the sooner his term as president and SA's diplomat-in-chief ends, the better for all concerned, including South Africans and especially our long-suffering northern neighbours. Mbeki has had numerous opportunities to take a principled position with regard to Zimbabwe, and so has the collection of neighbouring states that comprise the Southern African Development Community (SADC). They have failed dismally each time, the SADC most recently through its half-hearted appeal for the "expeditious" release of the presidential poll results. There are indications that the SADC's members are divided on the Zimbabwe issue, with Zambia, Mozambique and Tanzania keen to take a far stronger line against President Robert Mugabe's hijacking of state institutions to prevent the democratic process from taking its course. But Mbeki's policy of appeasement prevailed once more at the SADC summit, and the world was yet again shown images of him clasping Mugabe's hand and grinning like an awestruck schoolboy. 

UK TV Channel Exposes Co-Operation Between Mbeki And Mugabe
A report broadcast on Channel 4 News in the UK has helped to shed some light on President Mbeki's denial of the crisis in Zimbabwe. Reporter Jonathan Miller interviewed a disgruntled former Zimbabwean civil servant now in South Africa, who produced documents that showed how close Mbeki's relationship has been with Robert Mugabe. The documents also expose how the South African government has co-operated with ZANU-PF on political, security and intelligence issues. The documents revealed that Zimbabwe's Central Intelligence Organisation have agents in South Africa maintaining close surveillance of opposition officials and supporters. One document was a Zimbabwean government report of a meeting that took place between Mbeki and a Zanu PF delegation. It concluded; "It was clear that Mbeki was frustrated at what he sees as lack of progress in launching formal negotiations between Zanu PF and MDC. According to him the political process should be finished, and once this is done, the US and the UK would commit the promised resources, which in turn would lead to an economic recovery and the demise of the MDC." Mondli Makhanya, editor in chief of the Sunday Times newspaper in South Africa, said South Africa has always played a key role in upholding the Zimbabwe government. Makhanya dismissed Mbeki's policy of 'quiet diplomacy' saying Mbeki is active in assisting Mugabe and the Zimbabwean government in many forums around the world. He recounted how Mbeki legitimised elections in Zimbabwe in 2000, 2002, 2005 and 2008 even though all other observers concluded those elections were not free and fair. Mbeki also protected Mugabe at the Commonwealth, leading to his fall out with former Nigerian President Obasanjo. According to Makhanya, Zimbabwean refugees and political activists speak openly of the existence of "CIOs" in South Africa who monitor their movements. He believes this is why many are afraid to get involved in political matters.

Scorpions 'Unlikely' to Be Merged With Police By June
African National Congress (ANC) executive committee member and former head of the South African National Defence Force Siphiwe Nyanda admitted May 10 that the Scorpions were unlikely to be incorporated into the South African Police Service by June, as originally planned. Opposition party leaders attending a conference with Nyanda at the Institute for Security Studies in Pretoria on the disbanding of the Scorpions said the General Law Amendment Bill -- the law to facilitate the dissolution of the Scorpions -- was more likely to go through next year if the required consultation was undertaken. Democratic Alliance (DA) parliamentary leader Sandra Botha said that some laws, such as the Children's Amendment Act, had taken 10 years to pass. These comments came after Deputy President Phumzile Mlambo-Ngcuka's recent statement that efforts to push through the General Law Amendment Bill last month were delayed by discussions between the National Prosecuting Authority and its investigating arm, the Scorpions, and would be presented to Parliament in May. Nyanda said: "Obviously there was an ANC conference resolution in December, but if it's a case of it not being feasible by June, then it cannot happen at that time." He said the resolution was linked to the charges against ANC president Jacob Zuma, but insisted it had more to do with the way the Scorpions conducted themselves than the involvement of a party official. Nyanda said the ANC conference felt that it was important to separate the investigation unit from prosecution as this could lead to abuse of power. He said the Scorpions were using illegal methods to gather information, and the organisation was open to abuse for "sectarian and foreign interests" as indicated by the Browse Mole report, commissioned by head Leonard McCarthy, which accused Zuma of trying overthrow President Thabo Mbeki. Botha, Independent Democrats leader Patricia de Lille and United Democratic Movement leader Bantu Holomisa agreed that some of the Scorpions' methods should be reviewed, but that did not justify the unit being disbanded. Holomisa said that all major opponents of the unit happened to be those under investigation, such as Tony Yengeni, who was jailed for not disclosing a discount on his luxury vehicle; former transport minister Mac Maharaj, who was accused of receiving large amounts of money; and police commissioner Jackie Selebi, who has been accused of "having dubious relationships with drug lords and organised criminals".

Food And Electricity Prices Spark Union Protest
Thousands of members of the Congress of South African trade Unions (COSATU) took to the streets of Johannesburg April 17 to protest rocketing food and electricity prices. The unionists made their way through the city's central business district and then marched on the headquarters of the national power utility, ESKOM. "Prosecute those responsible for price fixing and collusion" and "food security: a caring society", read some of the placards carried through the streets by the 5,000-strong singing and dancing crowd. "It's not right for the Government to ask for a 53 percent increase of electricity tariffs", said Blade Nzimande, secretary-general of South Africa's communist party, to the applause of the throng. "Workers are the most oppressed; we are retrenched now and then, and many of us work as casuals so we can't afford such a high increment," he said. After signing a memorandum of understanding (MOU) presented to him by the protesters, ESKOM's Chief Executive Officer, Jorgen Vos, said he took the COSATU concerns "very seriously", and that ESKOM was working with stakeholders to "ensure that the poor do not feel the heavy impact of power cuts". Geoffrey, one of the protesters, said the poor suffered most from South Africa's ongoing electricity crisis. "We can't afford any other source of power like gas - we are not rich." The entire country has been hit by widespread planned and unplanned power cuts, or "load shedding", that is affecting every sector of the economy and sparking fear of job losses. The march then turned to a major supermarket chain, Pick n Pay, where protesters handed general manager Kevin Krom another MOU demanding action on spiralling food prices. Krom said he would share their concerns with senior management and other retailers. It looks like there is collusion between the supermarkets and government to fix the prices of some commodities. I can't run my life now "It looks like there is collusion between the supermarkets and government to fix the prices of some commodities. I can't run my life now," another marcher, William, told IRIN. According to a COSATU statement released earlier this month, "For more than a year now, food prices have been rising much more rapidly than overall inflation", the labour umbrella body maintained. With wages barely rising over the same period, the poor have borne the brunt. "The fact is that low-income households spend a far greater proportion of their income on food than the rich - food price increases are fuelling economic and social inequality at a faster pace than the state social security system has been set to address," COSATU warned. Vusi Maduna, a mother of two participating in the march, said food prices had risen so sharply that she could barely feed her family. The COSATU statement also pointed out that high interest rates, high petrol prices and rising unemployment were compounding the problems of the poor. Official estimates put South Africa's unemployment rate at 25 percent, although independent economists have said the joblessness rate is nearer 40 percent. COSATU vowed to organise more demonstrations throughout the country until the government gave in to their demands.

World's Left Must Unite - Zuma
ANC president Jacob Zuma has called on leftist governments to unite in their lobby for United Nations and World Trade Organisation reform as well as conflict resolution and climate change. Speaking at the "four-party" dialogue in Berlin, Zuma dealt extensively with the global economic downturn, highlighting what progressive governments could do to aid the poor. Speaking to leaders of centre-left political parties in India, Brazil and Germany, Zuma said they needed to "exploit" the fact that many left-wing parties were now in government. This is Zuma's first tour out of Africa since his election as ANC president in December. Accompanied by ANC deputy president Kgalema Motlanthe, he is leading a delegation to Germany, the UK and France. The ANC delegation will engage in party-to-party talks, meet businesses and give media interviews. "Another great strength is the principle of solidarity, which not only informs the ideological perspectives of the left, but also lays the basis for a progressive global movement united in pursuit of the shared interests of all humanity. It has managed to transcend national interests, and find common cause among people of very different backgrounds, cultures and economic means," Zuma said. While explaining the role leftist governments should play in the new world order, Zuma warned that the battle had to be fought and won on merit. He also used the platform to highlight his confidence that SA would overcome its electricity crisis. This was an opportunity for the country to "leapfrog through necessity into a new era of energy efficiency and greater reliance on renewal energy".

UN Rights Council to Review Country
South Africa's human rights record was scrutinized April 15, by the UN Human Rights Council in Geneva at a Universal Periodic Review Session focusing on abuses around HIV infections, sexual violence, and asylum procedures. Under the review process, governments submit a written report and non-governmental organizations are invited to comment on the human rights situation. But since South Africa did not submit its report until the eve of the session, and did not consult ahead of the session with South African civil society groups and international nongovernmental organizations, these groups were only able to present written concerns about a wide range of human rights issues to the council. Among the topics of concern to Human Rights Watch are: The high incidence of sexual violence and the scale of HIV infection in South Africa. It is essential that health provision reform due in May 2008 ensure that all victims of sexual violence have prompt access to and information about post-exposure prophylaxis (PEP) to reduce the chance of contracting HIV. The 2007 Sexual Offences Act, which requires victims to either file criminal charges with the South African Police or report the alleged offence to a designated health establishment as a condition of receiving PEP. Human Rights Watch and other organizations have found that conditioning assistance on filing a police report may effectively prevent victims from receiving lifesaving PEP because many survivors are reluctant to file charges or because of police delays. Asylum procedures, which can be onerous. Asylum-seekers often face obstacles in filing asylum applications. With the deteriorating situation in Zimbabwe, urgent reform is needed to ensure protection for Zimbabweans seeking refuge in South Africa.

Country's 2009 Election to See 50% Female Representation
The next election in South Africa may see women reach a critical mass of 50 percent representation in parliament, says Deputy Speaker Gwen Mahlangu. Saying South Africa "might be bragging a little bit", she added April 13 that the ruling party has made a commitment to ensure that women were treated equally. She further pointing out that Rwanda now led the world in terms of representation of women in politics. Ms Mahlangu was speaking at a press conference hosted by the Inter-Parliamentary Union (IPU), which held its 118th gathering of Members of Parliament from around 140 countries at the International Convention Centre in Cape Town. She was joined at the press conference where the results of an IPU survey on Equality in Politics was released by IPU Secretary-General Anders Johnsson, a Swedish MP, who said that the average representation of women by all the IPU's members stood only at about 18 percent. Ms Mahlangu said at a briefing on the IPU last week that the IPU, which was founded in 1889, had a strong reputation for the accuracy and depth of its surveys and studies of parliaments around the world. Mr Johnsson added that the IPU was aware that women brought something "unique" to politics, and that by virtue of being women, they tended to bring a stronger focus on social issues, as well as issues of overall equality.

In candid remarks, Mr Johnsson said: "If you want a parliament that serves the interests of the people, you are better off having lots of women [represented]." Ms Mahlangu underscored these remarks by adding that women "take along the family all the time - women think about the family, children". This considered, Mr Johnsson pointed out, however, that the realisation in many of the democracies of the world of the important role women had also raised the constraints they faced. Such constraints were often relatively simple issues, such as meeting times - when women had commitments to care for children - as well as lack of childcare facilities in parliaments and other logistical hurdles they faced because of the often dual role in caring for children and families while also working. Another observation found by the IPU survey, he said, was that the type of language used in parliaments often was "less confrontational" the more women were represented, and this resulted in a tendency "to reach more of an understanding on the issues" under debate. At the same time, male MPs tended to prefer the seemingly more glamorous portfolios of foreign affairs, finance and defence, while women brought sense of community to social issues. However, Ms Mahlangu pointed out that because of the existence of the Women's Caucus on South Africa's parliament, women MPs were able to touch on - and effect to some degree - virtually all legislation being passed by the House, including the so-called traditionally male areas of defence, finance and others. At the same time, Ms Mahlangu insisted that women's issues were not about exclusivity, and that men were continually encouraged to participate in discussions on gender. This was true not only of parliament in South Africa but in wider society, where she added that the almost 1 000 items of legislation passed since 1994 that had some relation to gender would have less effect on men unless men participated more actively in their implementation.

Biofuel 'Thirst' Prompts Food Solutions
The emergence of the biofuels industry as a competitor for agricultural land is driving regional economies around the world to seek new opportunities and partnerships to feed their populations, according to European Union (EU) ambassador to SA Lodewijk Briët. Announcing the EU investment programme for the Southern African Development Community (SADC) agri-industry April 25, Briët said he hoped the initiative would assist in creating strategic partnerships and opportunities that would go a long way to reducing the negative impact of increasing food and agricultural commodity prices internationally. The European Commission delegation to SA has made close to € 1,3m available through the EU-SADC Investment Promotion Programme that has been set up to link EU-based investors to SADC-based producers, especially in the agri-industry. Providing incentives and support to agriculture, most notably to food crop production and processing, was crucial at a time of looming food shortages, the EU commission said. Briet said the world's challenges were becoming complex as it was facing a growing population; there had been a rise in living standards, particularly in Asia, with ensuing dietary changes, rising agricultural input and freight costs linked to an increasing oil price. Meanwhile, some countries were experiencing difficult weather conditions arising from climate change, which were threatening production areas. In the search for answers, the EU would support the Agri-Industry 2008 exhibition, which is expected to bring together various sector forums and business during May 5-9 in Dar es Salaam, Tanzania. It is believed that the exhibition would provide a platform for new partnerships to be forged between producers, investors and financiers. It would also help facilitate the development of sustainable and meaningful trade, business and investment partnerships between enterprises in southern Africa and the EU countries. The top five sectors being targeted are: horticulture, fruit and vegetables; livestock and dairy; cereals, beans and nuts; fisheries and aquaculture; as well as export crops such as tea, coffee, cotton and sugar. A comprehensive sector profile had been prepared for each of the 14 SADC countries participating in the event, said Briët.

White Men 'Still Rule Executive Roost in SA'
White professional males are still clinching top jobs and in certain sectors account for the majority of candidates placed by headhunters, particularly at senior management level, says Debbie Goodman-Bhyat MD of Jack Hammer Executive Headhunters. Goodman-Bhyat said that 51% of all candidates successfully placed by the consultancy last year were white males and that this percentage reflected almost no variation relative to 2006 figures. "In total, white candidates -- both male and female -- accounted for 69% of all our placements, with the remaining 31% being employment equity appointments," Goodman-Bhyat said. She said although companies were pushing harder to secure employment equity candidates, the reality of SA's skills deficit was forcing most employers to prioritise experience and skill over employment equity factors. Access to senior and middle management posts by black South Africans has come a long way since 1994, but is being stalled by difficulties in finding experienced candidates and the general skills shortage plaguing the country, according to a recent report issued by human resources consultancy PE Corporate Services. The report found that just under 25% of senior management posts were held by black executives. While this compares favourably with less than 5% in 1994, the penetration level has shown a minimal increase in the past three years. "One would assume that with the continued emphasis on transformation both race and gender specific appointments would receive substantial focus from employers," Goodman-Bhyat said. "However, last year we received many employment equity mandates from our clients, but none specified gender," she said. "Perhaps this might reflect progress in terms of a diminishing gender bias, but with women accounting for just 30% of Jack Hammer's executive level placement, the reality is that there is still a substantial disparity." She warned, however, that although this figure was low, it should be seen in context. "Historically, we have found women to be generally more risk-averse than men, with a greater need for job stability. This means they are often less open to the idea of being headhunted or changing jobs when they are not actively looking." Goodman-Bhyat said there were job market changes that would have an effect on women and their career paths. For instance, some companies are offering "work-life balance" solutions that appeal to women, including flexitime, work from home options and improved maternity benefits. "Combined with the fact that women are increasingly becoming breadwinners in their families, we expect to see the proportion of our female placements increase substantially during the next several years," Goodman-Bhyat said.

Mboweni Increases Repo Rate to 5-Year High
The Reserve Bank raised interest rates to a near five-year peak April 10, saying price pressures were spreading and warning that proposed electricity tariff hikes painted a "bad scenario" for the inflation outlook. Governor Tito Mboweni said the decision to raise the repo rate by half a percentage point to 11,5% was also driven by a deterioration in inflation expectations, which predict the 3%-6% official target range would be breached for three more years. Mboweni hinted that further interest rate hikes could be in store for the slowing economy if power utility Eskom gets the go-ahead to double its tariffs, and urged Finance Minister Trevor Manuel to help prevent this. "I think we should go home and pray that these events don't come about. If they do it means our battle with inflation will be long and hard -- we will have to pound more holes in our belts so we can tighten a bit," he said. "You cannot make a decision on the inflation target and then walk away and make decisions which make achievement of that target very difficult. The minister of finance and I are in this together," he said. The latest interest rate hike boosted prime lending rates set by commercial banks to 15% -- their highest since July 2003 -- and took the cumulative increase since June 2006 to 4,5 percentage points.

Consumer demand, the main engine of growth, has slowed sharply as a result, but Mboweni said the economy was in no danger of being "overdosed" by higher interest rates, which were not at bad as levels seen in 1998, when they peaked at 25,5%. "If you look at history, we are nowhere near where we were in 1998 -- but I am not suggesting we are going there now either," he said. Mboweni highlighted a dramatic worsening of inflation expectations measured by the Bureau for Economic Research (BER) in a quarterly survey released yesterday. It showed that consensus forecasts from business, labour unions and analysts predict that the annual rise in the targeted CPIX index will average 7,8% this year, 7,0% next year and 6,7% in 2010. That compares with forecasts of 5,9% for this year and 5,6% for next year in the BER's previous survey. The CPIX index, which measures consumer prices excluding home loans, has already breached its target range for 11 months in a row, rising by 9,4% in February, a near five-year peak. Mboweni said CPIX was expected to peak "just below 9,5%" in the first quarter of this year, but would only subside below the upper limit of its target in the final quarter of next year. That compares with forecasts at its last policy meeting in January that CPIX would peak at 8,5% in the first quarter of this year and fall below 6% by the end of the year. The governor pointed out that the Bank's latest inflation predictions did not take into account a possible further increase in Eskom's 14,2% rise in electricity tariffs this year. The national Energy Regulator of SA (Nersa) will rule in June on its request to revise the increase to a nominal 60% this year and 40% next year. Mboweni declined to be drawn on what would happen to the inflation outlook if those price hikes are granted, but analysts say they could push inflation up by another two percentage points, taking CPIX to a record peak of 11,6% this year. "Mboweni's hawkish tone hints that the tightening cycle has not yet run its course," said Alvise Marino, IDEA global emerging market economist in New York. Marino believes Nersa will be forced to grant a further electricity tariff increase, which will tarnish the inflation outlook and force the Bank to raise interest rates again this year -- possibly more than once. The Bank's next monetary policy meeting is in June, a week after Nersa is scheduled to release its decision. Mboweni also cited a sharp depreciation in the rand -- which has slid by more than 16% on a trade weighted basis so far this year -- as another threat to the inflation outlook. That pushes up the cost of imports and has helped boost local fuel prices by R1,27 a litre so far this year. 

SA Unemployment Rate Down to 23 Percent
South Africa's unemployment rate decreased to 23.0 percent in the third quarter of 2007 from 25.5 percent recorded at the same time a year ago. This is a record low since the inception of the Labour Force Survey in 2001 according to Statistics South Africa (Stats SA) March 27. The most recent Labour Force Survey data revealed that the total of number of employed South Africans in September last year was approximately 13.2 million which indicates a net gain of 433 000 jobs. "The jobs growth rate adds up to a year-on-year gain of 3.4 percent, still off the 5.2 percent year-on-year GDP gains in the third quarter and highlighting a continuing jobless growth conundrum." The data also shows that while the total labour force had dipped slightly to17.18 million people from 17.19 million in the third quarter 2006, 13.2 million of those were employed. Most jobs were seen in the formal sector (610 000) while the working age population (between 15 and 65) was recorded at 30.4 million from 30.0 million reported in September 2006. Major contributing industries were private households, which refers mainly to domestic workers was up by 137 000 jobs while personal services added 132 000 jobs. "The number of domestic workers rose to a record 1.06 million, 8 percent of the 13.23 million employed South Africans, in a trend that might stem from rapid growth in SA's black middle class." The community and social services industry, the country's second biggest employer after retail trade accounted for 18.5 percent of jobs. These include teachers, police and health workers as well as private workers such as beauticians. According to the date, government's effort to empower women has showed results. The female unemployment rate dropped to 26.7 percent in September from 30.7 percent in the same month the year before, showing women accounted for most of the net 433 000 rise in jobs. Stats SA said the country's economic growth has been a driving force in job creation. The construction sector has fuelled growth as government intensified spending on rail, power and stadiums in preparation for hosting the 2010 FIFA World Cup. The pickup in job creation is positive; to meet government's official goal help cut poverty by halving unemployment by up to 14 percent in 2014. The biggest decline in unemployment was seen in Gauteng and KwaZulu-Natal while the Western Cape showed the lowest improvement. The survey is based on interviews with 30 000 households and includes people working in the formal and informal economies.

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AUTOMOBILES

Vehicle Sales Are Put Into Reverse
New vehicle sales plunged by an annual rate of 17,5% in March - the biggest drop in six years, but exports surged 54% to a record peak in a trend likely to hold for this year, easing pressure on SA's gaping trade deficit, the National Association of Automobile Manufacturers of SA (Naamsa) said April 2. New vehicle sales dropped to 47778 from 57881 in March last year, hit mainly by falling passenger car sales, which slumped by more than 23% during the period, the industry body said. But, the depth of the fall -- extending a downtrend which began 14 months ago -- could be partly blamed on Easter holidays falling in the month, implying fewer sales days, Naamsa said. Rising interest rates and inflation have boosted household debt, forcing consumers to cut back on spending in a trend which has hit domestic vehicle sales harder than any other part of the economy. On a more positive note, Naamsa said the industry exported a record 22888 vehicles last month -- up 11% from February. "Despite the severe downturn in domestic light vehicle sales, industry production continues to expand on the back of growing export sales," it said. "Record growth in vehicle exports during 2008 will benefit domestic component and vehicle manufacturing operations. It will contribute positively to SA's trade balance and should enhance the industry's contribution to gross domestic product." The trend also showed the government's Motor Industry Development Programme was safeguarding the sustainability of South African vehicle and component manufacturing industries, Naamsa said. SA's trade gap narrowed sharply to R5,8bn last month from R10,2bn in February as a weaker rand boosted the value of exports. But demand for capital imports is set to keep pressure on the deficit. Overall vehicle sales rose 3,2% last month, while passenger car sales nudged up 0,7%. "Were it not for the holidays last month, annual growth in passenger vehicles could have been eight percentage points higher," said Standard Bank economist Danelee van Dyk. Commercial vehicle sales, which have benefited from an official infrastructure spending drive, rose 7% from the previous month but still fell 8,2% compared with the same month last year due to weak demand for light commercial vehicles.

Mercedes Still Growing Despite Tough Trading
Mercedes-Benz SA has grown for the 10th consecutive year with turnover rising 13,5% to R37bn last year compared with the previous year, in spite of tough trading conditions. Chairman Hansgeorg Niefer attributed the group's success to the continued demand for its "exceptional vehicle products", produced locally and abroad, and for its well-tailored services. "These gave us a means to secure good sales across our range of premium vehicle brands, as well as opportunities for our finance and fleet business, and provided us with another year of record-breaking sales and turnover," Niefer said. The group had experienced a good year despite inflationary pressures, rising interest rates and general consumer caution, he said. Highlights included strong demand for the new Mercedes-Benz C-Class, commercial vehicle sales that were benefiting from the construction boom, and firm control on overhead expenditure. "These, together with the continuing excellent quality being achieved in our plant, continue to inspire confidence amongst our shareholders," Niefer said. The company's local subsidiaries, including Mercedes-Benz Financial Services, debis Fleet Management, Sandown Motor Holdings and Atlantis Foundries, all made good contributions to the bottom line. The company's commercial vehicle business achieved a 23,3% total market share, well ahead of its closest competitor at 14,5%. The commercial vehicle division sales volumes rose to 5870 units, providing a market share of 15,8% compared with 5104 units sold in 2006. Despite the effect of higher interest rates, the introduction of the National Credit Act, significant fuel price increases and a component industry strike, the group recorded annual sales in passenger cars of 32144 units. Mercedes-Benz executive chairman of financial services Kerry Elsdon said although the company's competitors were experiencing repossessions, Mercedes had decided rather to restructure financing for its customers. "We took a decision to refinance customers who find themselves in trouble to help them through this phase of higher interest rates and inflation, " Elsdon said. But tougher economic conditions did not seem to be affecting Mercedes-Benz customers as they were at the high end of the market. "The most worrying factor was that we had run out of the group's top seller, the C-Class, and only introduced the successor in the third trimester of the year," Niefer said. Mercedes-Benz Financial Services, which provides financing and insurance products at the dealerships, increased its portfolio with 31,4% growth in revenue, while retail division Sandown Motor Holdings' turnover grew by R7,3bn. "Even though we have enjoyed a good year , this year will be tough. Our retail people will work harder and focus on specific market sectors; 2008 will be the busiest year ever for new products," Niefer said.

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BANKING

Bank Launches Joint $1 Billion Mining Fund
South Africa's Standard Bank is launching a $1bn fund with China's Industrial and Commercial Bank (ICBC) to invest in mining and other natural resources. The fund will target projects in junior mining, energy and metals in Africa, China and other parts of the world, said the banks. ICBC, the biggest lender in China, recently bought a 20 per cent stake in Standard Bank and the new fund is a first step in a long-term collaboration between the two banks, said a statement. Dirk Kotze, general manager of The Beijing Axis, a consultancy working with Chinese companies investing in Africa, said: "It's a good link-up between the money and the people who need resources, and the people who know the country." China is seeking greater access to energy and metals overseas to fuel its booming manufacturing economy and supply raw materials for the rapid industrialisation of its rural areas. It has recently agreed a US$5 billion loan to the Democratic Republic of Congo in return for access to the country's copper and cobalt mines. ICBC's new partnership with Standard Bank will allow it to seek more 'private' deals, said Mr Kotze, rather than following Chinese companies into Africa. He added that the tie-up between institutions from China and South Africa was "long overdue" because both countries have significant interest in the African continent's resources. "Those interests were converging. There would have been inefficiencies if they hadn't collaborated at some time," he told Business Daily. ICBC and Standard Bank started talks on the fund last year. Under the final agreement, each will invest US$200 million with the remainder made up of funds from third parties. It is not known whether the fund will support any mining projects in Kenya. A Chinese company already has a presence in Kenya's titanium mine after the Jinchuan Group bought into Canadian exploration company Tiomin. Typically "the Chinese have a propensity to go for big ticket deposits", said Mr Kotze. The ICBC-Standard Bank fund has a return target of 20 per cent. "The money will go where there is money to be made and that's in resources for the moment," added Mr Kotze. Standard Bank and ICBC also announced the start of co-operation on trade financing, investment funds, commodities and global markets. Speaking at the launch of the fund, ICBC chairman Jiang Jianqing said the co-operation "will not only create greater value for our shareholders, but will help further future developments in China-Africa trade relations". A committee has been set up to manage the resources fund, co-chaired by ICBC president Yang Kaisheng and Standard Bank chief executive Jacko Maree.

Teba Says Absa Move a Blow to Transformation
Black-owned Teba Bank has accused SA's biggest retail bank, Absa Bank, of reneging on a promise to sell its stake in Eastern Cape-based lender Meeg Bank, charging that the move was an affront to transformation in the financial services sector. Teba CEO Mark Williams said April 6 that Teba Bank officials met Absa representatives on January 6. The officials agreed to sell its 49,61% stake in Meeg Bank, but, before Teba could make an offer, Absa had done an about-face, offering to increase its stake in Meeg to 100%. Absa spokesman Patrick Wadula said that Absa had been a willing seller over the past two years of its 49,7% stake in Meeg. "Absa has had discussions with various interested parties," he said. "However, to date no concrete offer had been forthcoming. "Absa's decision to help Meeg Bank confirms Absa's commitment to assisting the unbanked in the Eastern Cape by providing access to finance and banking services in the region." On March 19, Absa said it had increased its stake in Meeg from 49,7% to 74,5% for R53m, to ensure Meeg met its capital adequacy ratio in line with the Basel 2 capital rules. Absa said it had also offered to acquire the remaining stake in Meeg Bank. Williams said: "We are absolutely disappointed that Absa not only prolonged discussions regarding the sale of its shareholding in Meeg Bank to Teba Bank, but has also taken an about-turn and decided to acquire 100% of Meeg Bank themselves. "Teba Bank's intention was subject to a viable integration plan, to merge the two small organisations into a medium-sized, black-owned bank, in order to boost sustainable broad-based transformation in the industry. "It is imperative from a social, economic and political standpoint that the financial services industry in SA commits to and delivers on broad-based sustainable transformation. Opportunities for large players to show commitment to transformation in a demonstrative way are rare," he said. "Furthermore, prospects for small black-owned banks to grow into medium-size operations, and achieve scale, are also scarce, " Williams said. Finance director Jo-Ann Pohl said Teba Bank was "ideally positioned" as a vehicle to accelerate sustainable transformation in the financial services industry and that it had demonstrated its commitment through 32 years of service to blue-collar workers and rural communities. The bank, which is wholly owned by Teba Fund Trust and managed jointly by the National Union of Mineworkers and the Chamber of Mines, has 90 branches in SA and more than 700000 customers, making it the eighth-largest bank in the country by assets. "These largely rural communities make up the under-serviced sector of our market and Teba Bank will continue to enhance its presence in these markets, particularly in areas such as the rural Eastern Cape, a traditional stronghold of the bank," Pohl said. "This will be accomplished through an aggressive branch expansion programme in the region, coupled with substantial improvements to our offering, to ensure that no gaps will be left by the closure of Meeg Bank."

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CONSTRUCTION

Nigerian Company Buys 45 Percent Stake in Sephaku
Nigerian industrial conglomerate Dangote Cement has acquired a 45% stake in Sephaku Cement, which is building a R3bn plant in North West. The figures involved were not disclosed, but Sephaku Cement chairman Lelau Mohuba said the partnership would provide the necessary funding and technical expertise to expedite the construction of the cement plant, without affecting its status as a black-owned and controlled company. "It will be the most modern cement plant in SA and will set the benchmark for emissions as well as power and energy efficiencies. A number of existing South African cement plants, some of which are in excess of 40 years old, have inefficient and uneconomical capacity," Mohuba said. Dangote Industries president Aliko Dangote said the partnership with Sephaku provided an early entry for the group into the South African cement market with a group of like-minded entrepreneurs. "Working together will provide a win-win solution to delivering cost effective product at world class levels of energy efficiency and emissions," Dangote said. Dangote Cement plans to list on the Nigerian stock exchange, and is also targeting a GDR listing on the London Stock Exchange.
The Nigerian company recently commissioned two cement plants with a combined capacity of 8million tons a year. It also has two import terminals, located in Lagos and Port Harcourt, which have production lines to supply cement in 50kg and 1 500kg bags and recently placed an order for three new plants, totalling 16-million tons in capacity, for Nigeria and 2,6-million tons for Senegal. Sephaku Cement CEO Pieter Fourie said construction of the plant was on course as all the funds needed had been raised. The company, a subsidiary of Sephaku Holdings Limited, had raised 60% of the funding from a consortium of banks led by Investec and 40% from the company's own equity. "We have decided to cancel plans to list on the stock market in order to raise capital. We are now fully funded and there are no immediate plans to list," Fourie said. The construction of the plant is expected to start in the third quarter of this year and at least 300 permanent jobs would be created once the plant was completed by mid-2010. The plant will have an annual capacity of 2,2-million tons. "We are in final negotiations with a South African construction company to build the plant and equipment and machinery will be supplied by Danish company FL Smidth," Fourie said.

Old Mutual Property Unit Invests in Nigeria
Old Mutual Investment Group Property Investments (OMIGPI) announced April 8 that it would be creating and managing a major waterfront development in Nigeria in a joint venture with a Nigerian company. OMIGPI MD Ben Kodisang said the Jabi Lake waterfront development, which would be situated in the federal capital Abuja, was valued at between $300m and $500m. It is the group's first venture into Nigeria and is viewed as another "step into Africa and other international markets for OMIGPI operations". "Nigeria has 140-million people who are well educated. The economy has been booming because of oil and if you look at the built environment, it is 20 years behind SA. We see it as an awesome investment opportunity and it is also aligned with (the South African) government's intention to encourage the private sector to do business in Africa," said Kodisang. He said the deal had been signed off earlier this month and that the group hoped to start construction on the project at the beginning of next year. OMIGPI and Nigerian partner Cerberus will have an equal share in the joint venture company that is driving the development project. "Our aim is to design, construct, develop and manage a precinct of commercial properties on a 29,3ha site at Jabi Lake. " He said it would be a mixed-use development that would "start off with about 30000m' of retail space". Kodisang said the development would also have a hospitality element including two hotels, one of which would be a five-star establishment. The other hotel would be a three-star development. "It will also have an office and residential component." He said it would take at least 18 months to complete the project. "We have committed seed capital and appointed Louis Karol Architects to develop a waterfront concept for the site." Louis Karol have designed award-winning elements of the Victoria & Alfred Waterfront in Cape Town and last year completed the link mall extension there. OMIGPI has also been making major investments in the Indian market. The group recently established the $500m Triangle Real Estate India Fund with ICS Realty of India, which aims to capitalise on the rapidly expanding organised retail property market in India. OMIGPI also manages SA Corporate Real Estate Fund, which owns a 25% interest in Oryx Properties.

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FOOD AND DRINK

Heineken Breaks Ground in Sedibeng
International brewer Heineken's proposed new 3-million-hectolitre brewery is set to be built in the Sedibeng district outside Johannesburg. The brewery -- estimated to cost about R3bn -- will be jointly developed by Heineken and international spirits company Diageo. It will be 75% owned by Heineken, with Diageo holding a 25% stake. Heineken, Diageo and Namibia Breweries, parents of local marketing and distribution company brandhouse, will invest about R4,7bn to build the brewery and form a marketing and distribution joint venture. The brewery will initially have a capacity of 3-million hectolitres, but its construction will allow for expansion. It will brew Heineken, Amstel and other brands within the stable. The Sedibeng district is about 60km southeast of Johannesburg and encompasses Heidelberg, Sharpeville and Vanderbijlpark. The site, on the R59 freeway, is 80ha in size. The companies aim to complete construction by the end of next year, but face power and construction challenges. However, brewery GM Johan Doyer was confident the project would be completed on time. Heineken's Africa and Middle East regional president, Tom de Man, said the region would benefit from construction of the brewery. It was expected to create 225 permanent jobs as well as a "considerable number" of service-related opportunities. Heineken will provide technical training locally and abroad for South African staff. Chris Gilmour, an analyst with Absa Asset Management Private Clients, said the companies were under pressure to build a brewery as fast as possible as Heineken was absorbing the cost of importing Amstel. The company had also considered a site in Ekurhuleni. This site was still under consideration and it might be used as a distribution centre, Gilmour said. There was also a possibility the companies could form another venture with Budweiser brewer Anheuser-Busch for the 2010 World Cup, Gilmour said.

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INTERNATIONAL ECONOMIC RELATIONS

India and South Africa Strengthen Investment Ties
India is making SA one of its leading investment destinations, with fixed investments into the country by India's companies topping R15bn since 1994, India's consulate-general Navdeep Suri said. Speaking at a function in Johannesburg to mark the opening of a clothing exhibition from India, Suri said bilateral trade between India and SA had grown from zero in 1994 to about R5bn last year and the figure was growing at a rate of 40% a year. In addition, companies from India either were in the process of or had already invested about R15bn in different sectors of the South African economy. Tata Motors said April 9 it would make trucks and buses in SA and would set up a manufacturing facility in Rosslyn. Tata Steel, India's second-biggest steel company, commissioned a ferrochrome smelter in Richards Bay at the beginning of the month. The Mumbai-based group is also planning to build hotels in Cape Town and Johannesburg. It has entered the telecommunications market through a 26% stake in Neotel. Neotel said it had achieved its target of R1bn in turnover last year, and it expects to double it next year It also said that it had plans to invest R11bn of capital over 10 years on rolling out its network and products. India ended its first summit with African nations April 9, aimed at deepening ties with the continent. The two-day meeting was attended by leaders of 14 African countries and regional economic groupings. High food security, high oil prices and climate change were identified as top concerns in a joint declaration as India and Africa pledged to work as partners to solve economic and development challenges. With India's economy growing at almost 9% a year, New Delhi is looking at Africa's mineral and hydrocarbon resources to help fuel its growth.

India Offers Trade Privileges to African Countries
Recognising the importance of market access to ensure the development of international trade, India is engaging the African states and offering trade privileges to the continent which has more than 900 million people. Indian Prime Minister Manmohan Singh said his government would offer a duty-free tariff preference scheme for the least developed countries (LDCs) to spur trade and commerce. "The objective of our partnership is to co-operate with all African countries, within the limits of our capacities and capabilities, in their efforts towards achieving economic vibrancy, peace, stability and self-reliance. "Towards this end, it is our intention to become a close partner in Africa's resurgence," he said in his opening address at the two-day India-Africa Forum summit in New Delhi April 8. Under the scheme, India will unilaterally provide preferential market access for exports from all 50 LDCs, 34 of which are in Africa. The scheme will cover 94 percent of India's total tariff lines. Mr Singh said the scheme would offer preferential market access on tariff lines that comprised 92.5 percent of global exports of all LDCs. Some of the products of immediate interest to Africa that are covered include cotton, cocoa, aluminium ore, cashew nuts and ready-made garments. He said India would also undertake the development of critical projects over the next five to six years, against grants in excess of $500 million. The Prime Minister said India would also strengthen local capabilities by creating regional and pan-African institutions of higher education, especially in sciences, Information Technology and vocational education and investment in research and development in renewable forms of energy, and agricultural development. "We will enhance opportunities for African students to pursue higher studies in India. "As an immediate measure, we propose to double our long-term scholarships for undergraduates, post graduates and higher courses and increase the number of training slots under our technical assistance programme from 1100 to 1600 every year," he said. Africa-India trade has surged significantly, from $5.5 billion in 2002 to $30 billion last year. Leaders of 14 African countries, including several presidents, are here to explore deeper trade relations with India, which is now the world's fourth largest economy.

Mbeki's First State Visit to Swaziland
Normally ignored and hardly the focus of South African diplomacy, Swaziland was the subject of President Mbeki's attention April 24 when he held talks with King Mswati. The day-long visit, at the invitation of the king, was intended to strengthen political and economic ties. Among other areas, the two leaders undertook to co-operate over joint water and tourism development projects. The trip symbolised Mbeki's intention to reclaim his role on the continent following his battering over Zimbabwe. Coming three weeks after the death of an exiled senior official in Swaziland's main political movement, Mbeki's trip was overshadowed by political overtones. Gabriel Mkhumane, deputy president of the People's United Democratic Movement (Pudemo), was shot dead in Nelspruit, Mpumalanga, where he was working as a doctor. Political activity is highly restricted in Swaziland. Most opposition politicians boycotted the previous elections, held in 2003. Even though a new constitution was promulgated in 2005, there was no sign of change. Civic groups were also waging a campaign for a boycott of parliamentary elections due later in the year. Lucky Lukhele, Swaziland Solidarity Network spokesman, said Mbeki's state visit, his first official visit to Swaziland, was a welcome initiative. "We don't expect a public statement but we know he is a democrat and will not betray the people of Swaziland." Buoyed by remittances from SA -- through Swaziland's membership of the Southern African Customs Union -- Mswati has been constantly accused of wasteful expenditure even as his country battles poverty and the highest rate of HIV infection in the world. A "40-40" celebration was planned later this year when his 40th birthday will be celebrated with the national independence anniversary. "The media focuses its attention on democratic practices in Zimbabwe, and rightly so. But the situation in Swaziland is worse," said Congress of South African Trade Unions spokesman Patrick Craven. Even as it enforced a ban on political parties, Swaziland was hardly the focus of regional and international attention. The lack of pressure on Mswati to adopt democratic reforms is because of an absence of interest by western powers, says political analyst Steven Friedman. "Ironically, if your major concern is proving to the world that Africa is not a basket case, then you end up having them set the agenda," he said. Mbeki was accompanied by Water Affairs and Forestry Minister Lindiwe Hendricks, Home Affairs Minister Nosiviwe Mapisa Nqakula, Deputy Trade and Industry Minister Elizabeth Thabethe and Deputy Agriculture and Land Affairs Minister Dirk du Toit. The visit was also to explore opportunities around the Soccer World Cup.

South Africa and Chile Agree to Expand Economic Links
South Africa and Chile have agreed to actively expand economic and trade links between the two countries following bilateral discussions. South Africa's Foreign Affairs Minister Dr Nkosazana Dlamini Zuma held discussions with Chilean Foreign Minister Alejandro Foxley in the Chilean capital, Santiago. The two ministers discussed plans to increase the number of high-level business delegations in order to explore the attractive trade and investment opportunities in both countries. The two countries are expected to sign an agreement on the mutual avoidance of double taxation. The existing trade tariff regime will also come under review in an effort to remove impediments to the expansion of trade volume. Current two-way trade volumes amount to some R1 billion, two thirds of which are Chilean exports to South Africa. The trade imbalance will be among the focus of bilateral discussions during the proposed state visit of Chile's President Michelle Bachelet and Mr Foxley to South Africa later this year. On the investment front, the two ministers agreed that given the growing economies of the two countries, attractive investment opportunities for the business sectors of both countries exist in such areas as mining operations, services and technologies as well as in such sectors as food production and processing, aqua-culture, wineries, entertainment and hospitality. In this regard, the current sizeable investment of approximately $4 billion by South African companies in Chile, including Anglo-American, Tiger-Brands, Irvin-Johnson, Sun International and others are in the forefront of growing South African investments in Chile. During the bilateral meeting, the two foreign ministers said they remain committed to the fact that political relations between South Africa and Chile must remain sound. The ministers agreed to convene the next meeting of the SA-Chile Joint Consultative Mechanism in Santiago in June this year. The Joint Consultative Mechanism continues to serve a constructive purpose in the ongoing political dialogue between the two countries at bilateral, regional and multilateral levels. The flow of tourists between the two countries is growing rapidly and is expected to increase sharply in the run-up to and during the 2010 FIFA World Cup to be held in South Africa. Accordingly and in pursuance of further consolidating and strengthening bilateral ties, Ms Dlamini Zuma conveyed President Thabo Mbeki's invitation to Chile's President to pay a state visit to South Africa at the earliest mutually convenient date. Also, Dr Dlamini Zuma invited her counterpart to visit South Africa before the proposed state visit to ensure maximum success of that visit. 

Zuma Steps On Mbeki's Toes With Angola Visit
ANC president Jacob Zuma has ventured into President Thabo Mbeki's terrain by announcing that his four-day visit to Angola late March not only yielded a high-level meeting with Angolan President José Eduardo dos Santos but also laid the groundwork for future foreign relations and trade agreements between the countries. Zuma said the party had agreed to "step up" economic investment in Angola. "We will discuss, in the ANC, how to move forward with this agreement," Zuma said. It is understood that a Zuma presidency intends paving the way for South African business to invest in Angola in the mining, agricultural and construction industries. Zuma's overtures signal a departure from Mbeki's approach, which was characterised by frosty relations between Pretoria and Luanda. "It will enhance existing business that has been going on between the countries, to ensure it moves in a particular direction," Zuma said. Steven Friedman, senior political analyst at policy think- tank Idasa, said that it was clear Zuma was "playing president". As head of the ruling party Zuma is first in line to take over when Mbeki steps down next year. "The level of discussions is not what political parties usually discuss. Political parties usually discuss political co-operation and solidarity," Friedman said. He predicted that the ANC's discussions in Angola were also likely to create further "irritation" between the Union Buildings and (ANC headquarters) Luthuli House. During the media briefing Zuma said it was important for the ANC to play a "critical role in the socio-economic and political development" of Angola. "Oh yes, that what we mean by socio-economic development. We are very much in agreement, we need to step up economic investment," Zuma said. Racked by almost 30 years of civil war, public infrastructure in Angola is weak. But because the country is abundant in natural resources it is seen as an untapped investment opportunity. Although SA has an existing bilateral agreement with Angola, Zuma has seemingly capitalised on gaps in the political repertoire between the two countries. "To us it was important that we pay this visit to strengthen relations. In the past, party to party meetings have been accidental. We have agreed to change this," Zuma said. Speaking after the media briefing, ANC spokeswoman Jessie Duarte said that while no formal agreement had been reached between the parties, the ANC as the ruling party had the authority to hold such talks. Zuma, accompanied by several high-ranking ANC leaders including Thandi Modise, Ayanda Dlodlo, Ebrahim Ebrahim, Billy Masetlha and Angie Motshekga, made the trip to commemorate the 20th anniversary of the battle of Cuito Cuanavale. The 1988 battle changed the political landscape of the region by speeding up Namibia's independence and SA's liberation from apartheid. More than 4800 people died during the conflict. During his visit, Zuma paid tribute to the heroes and heroines of Angola, Cuba and Namibia who fought in the battle. He announced that a monument would be set up in Angola so tourists would be told the story. "A committee will be established that will identify the graves of our fallen Umkhonto we Sizwe soldiers. This will give way for monuments and possible repatriation of our human remains," Zuma said. "We also took this opportunity to thank the Angolans for the support they gave us (the ANC) during the struggle against apartheid. It was unequalled," Zuma said. 

“Special Browse report”
Among other issues discussed, Zuma said mention had been made the controversial "Special Browse report" during his closed-doors meeting with Dos Santos. The report contained allegations that Zuma, the then ANC deputy president, was being funded by Dos Santos and Libyan leader Muammar Gaddafi in a plot to overthrow Mbeki.

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LAND REDISTRIBUTION

New Expropriation Bill to Advance Land Reform
The Expropriation Bill which has recently been passed in Parliament will advance land reform and replace the so-called unconstitutional Expropriation Act of 1975. Public Works Minister Thoko Didiza, briefing the Public Works Portfolio Committee, said the 1975 Act is inconsistent with the current Constitution of South Africa in several key areas. These areas include the recognition of rights of tenants and farm workers; the basis for payment of compensation and the rationale for expropriation, said the minister. The recently endorsed Bill seeks to align the Expropriation Act with the Constitution in order to provide a common framework to guide land reform in South Africa. In 1998, South Africa's government embarked on a process of land reform following the forced removal of hundreds of thousands of Black, Indian and Coloured South Africans from their land during apartheid. Those who had been disposed of their land were given until 31 December 1998 to lodge their claims with the Land Claims Commission. In the past farmers claimed that they were not receiving appropriate market value prices for their properties, but now this issue is clarified under the new Bill, said the minister. "Whereas the 1975 Act narrowly focused on the market value as the sole determinant for the negotiations preceding expropriation, the proposed new Bill, in line with the Constitution, takes the holistic view and considers other relevant factors such as the current use of the property. "...the history of the acquisition, the extent of the direct state involvement and subsidy in the acquisition and beneficial capital improvement of the property." Also important to note, is the creation of the Expropriation Advisory Board which will advise all expropriating authorities to consider all factors before expropriation takes place. The minister highlighted that the Expropriation Advisory Board would also determine compensation for a property. The Bill is expected to go before Parliament in the coming weeks; thereafter the public will be encouraged to comment. By August 2007, the Land Claims Commission had settled 93 percent of claims lodged by claimants dispossessed of their land during Apartheid's forced removals. This 93 percent translates into a settlement of 74 559 of the 79 696 claims lodged before the deadline. The commission is mandated to transfer 30 percent of commercial farm land to black beneficiaries by 2014, translating to about 25 million hectares of land.

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MANUFACTURING

Surprise Surge in Factory Output Thanks to the Rand
Factory output surged unexpectedly in February, a development attributed to rand weakness spurring demand for local exports, official data shows. Manufacturing, the economy's second-biggest sector, grew 3,5% year on year in February, up from a revised 1,2% in January, Statistics SA said. The news April 9 surprised markets. Power outages and waning consumer demand had fanned fear of a fall in output in the sector, which accounts for more than 16% of the economy. "Barring a collapse in March, output in the sector will probably be less of a drag on first-quarter growth than we anticipated," said Citigroup economist Jean Francois Mercier. Mining and manufacturing are seen to have been hit hardest by Eskom's incapacity. Compared with January, output rose 2,7%, the data shows. Gains were most pronounced in value-added sectors such as vehicles and parts, which rose 6% in February; electrical machinery, which rose 16,7%; and household appliances, up 9,9%. This was out of line with SA's purchasing managers index, almost at a five-year low last month after February's plunge. In both months the index was below 50, the point between growth and contraction. Analysts said resilience in output stemmed from the rand, down more than 12% against the dollar and 16% on a trade-weighted basis this year. "Weakness in the rand from the beginning of 2008 is inflating the value of manufacturing sales and supports manufacturing exports, which in turn should provide momentum to production," Efficient Research economist Fanie Joubert said. But the outlook for the sector this year is still poor, in the face of a global slowdown, waning consumer demand and continued power rationing.

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MINERALS AND METALS

Mittal Cancels Proposed Duferco Merger

Steel giant Arcelor Mittal, Mittal SA's parent company, has backed off from a planned merger with Duferco Steel Processing (DSP) - a move that might have been prompted by fears of sanctions by competition authorities for circumventing previous conditions imposed on it. The application for the merger, which would have further entrenched the steel maker's dominant position in the local market, was to have been heard by the Competition Tribunal in May. Mittal has now notified the competition authorities that it had ended the application, without citing reasons, commission economist Simon Roberts said. Mittal sought control of DSP by acquiring half of the shares owned by the Duferco Group and the balance from the Industrial Development Corporation. DSP transforms hot-rolled coil into cold-rolled coil and galvanised products, using coil from Mittal's Saldanha plant. The merger would have facilitated a vertical integration of the two operations. The Competition Commission recommended in September that the merger be turned down after it emerged during its investigations that Arcelor Mittal Steel SA had ignored conditions imposed on it last year by the Competition Tribunal to ensure fair play in the market. Historically, DSP was restricted from selling hot-rolled coil to the domestic market. The tribunal ordered this restriction to be lifted as a condition to the merger, but the commission found that DSP was still exclusively exporting hot-rolled coil. A commentator familiar with the deal said yesterday that Mittal 's decision to end the merger application might have been prompted by the commission's finding, as the assessment had opened the possibility for further investigation and sanctions if the group was found to have circumvented conditions the tribunal had imposed on it. Roberts would not speculate on the matter April 1. However, the commission welcomed the withdrawal as it said it would support the tribunal's efforts to ensure that exported product was available to local customers with prices approaching export prices. DSP should enjoy an "improvement in its competitive position", the commission said. "An independent DSP with access to competitively priced steel at export prices falls within this frame of analysis. The proposed merger would have eliminated one of the sources of competitive rivalry for cold-rolled coil and galvanised product in the local market," the competition body said.

Fourth Steel Price Hike on Way - Mittal
Steel users will have to brace for another hefty price hike - the fourth this year - as the weaker rand and rising input costs drive prices higher. The coming increase will bring the total price hike for the year so far to 60%, putting the squeeze on consumers and adding pressure to inflation. Steel producer Arcelor Mittal SA said that steel prices would increase by between 20% and 22% in May, translating into an average increase in the price of flat and long steel products of R1200 a ton. Galvanised steel prices will rise even more -- by between R2134 and R2366, depending on product specification. This follows price increases ranging between 9% and 18% for every month since the start of the year. The price hikes were driven by global steel price movements, Mittal spokesman Tami Didiza said March 28. "We have in the past month seen continued upward movement of steel prices on world markets, and this has again created a substantial gap between international prices and our own domestic price," he said, adding that future price rises were possible, depending on how the exchange rate held up. Since the Competition Tribunal ruled against the steel giant in an excessive pricing case last year, Mittal's price increases have consistently been met by outrage. But an analyst who declined to be named said market fundamentals had changed and the steel maker was only following a global trend. Mittal, which insists it has departed from the notorious import parity pricing model and has adopted a pricing model in which it compares its own prices with a basket of prices in comparable markets internationally, said even with the string of price increases, its steel was among the cheapest in this basket of prices. The basket include s Korea, Germany, China, Russia, Taiwan, Brazil and the US, but also takes into account the direction of market movements and exchange rate volatility. South African steel prices now averaged $880 a ton, while steel in the US cost $920 a ton and in Europe was already overshooting $1000 a ton, Didiza said. "Even with this price increase, we are still among the lowest prices within the basket we are using." Only steel in the Far East was cheaper than steel in SA, he said. With a slew of infrastructure development programmes under way, demand for steel in the domestic market has shot up to levels last seen in the 1980s. This rise has seen Mittal cut exports to increase its supply to the local market and its stock drop to the lowest level in years. But the steel producer is also under pressure from electricity rationing, which trims 1000 tons of liquid steel production daily. Mittal said yesterday the local market situation had no bearing on price increases, which were solely determined by international price movements.

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MINING

Angloplat Denies Move Blighted People's Lives

Anglo Platinum rejected old allegations revived in a newly published report from non-governmental agency ActionAid about a serious deterioration in the quality of life of communities around its Limpopo mines. The issues were highlighted in local television coverage and media reports last year when members of the Motlhotlo community at the PP Rust Mine, now renamed Mogalakwena Platinum Mine, blockaded roads and threw stones in protest against their relocation to a new site to make way for the mine's expansion. ActionAid's report, which has been picked up in a BBC programme, acknowledged its contribution from human rights lawyer Richard Spoor, who has been pursuing legal action against Angloplat on behalf of the Motlhotlo community for several years. ActionAid, according to its website, is a 36-year-old agency committed to fighting poverty, with about 320000 supporters in Europe. In the report, published on its website, ActionAid said thousands of people had lost agricultural land because of Angloplat's mining activities, had received little compensation and were suffering from poverty and hunger. They had lost access to clean drinking water and their relocation agreements had been signed with associations formed not by the community but by Angloplat. ActionAid criticised the removal of communities around Angloplat's Twickenham mine and the Angloplat- African Rainbow Minerals joint venture Modikwa mine, and said the minerals and energy department's inaction on these problems was unacceptable. Angloplat said both ActionAid's and the BBC's reports contained "numerous errors in addition to inflammatory statements". It said the relocated communities had access to more than twice as much agricultural land as before and had received brick houses the same size or bigger than what was previously occupied, as well as a cash resettlement allowance. Angloplat spokesman Simon Tebele said drinking water quality was the responsibility of the department and the municipality. Although ActionAid completed its report in November, this matter had not been brought to the attention of either Angloplat or the authorities, he said. The group welcomed the undertaking by SA's Human Rights Commission to investigate the allegations.

Platinum Defies Forecasts to Slip Lower With Gold.
Platinum tracked gold lower to record a 6% fall late April to $1933/oz, despite various forecasts of a bigger platinum deficit this year than last year because of disruptions to South African production. Weaker platinum and gold prices reflected a strengthening dollar on expectations that the US Federal Reserve would stop cutting US interest rates after positive first-quarter earnings reports from US companies and positive labour market data. Traders said there were signs that global market confidence was returning after fears of a financial meltdown with the US subprime mortgage crisis. Global risk aversion encourages investors to flee to safe-haven assets such as precious metals. But the prices of platinum and palladium are also determined by demand and supply, and operating difficulties in SA, which accounts for 75% of global production, have caused price volatility this year. Independent researchers GFMS said in its report on the platinum market that global production of platinum last year was 6,5-million ounces. Of this, SA accounted for 5,07-million ounces, a drop of 370000oz on 2006 production. GFMS said Anglo Platinum, Lonmin and Northam had the biggest falls in production. Anglo American CEO Cynthia Carroll said subsidiary Angloplat's production could fall 150000oz this year because of SA's power crisis. Last year Angloplat took the drastic step of halting production on a rolling basis at its flagship Rustenburg operations to retrain workers in safety after a series of fatalities. A spike in fatalities last year at all South African mines, but especially deep-level gold and platinum, caused temporary stoppages. Lonmin, the world's third-biggest platinum producer, said March quarter platinum production was 17% down on the December quarter's, and cut its full-year production forecast to 775000oz from 860000oz. The group warned that it might not meet the revised target if there was a deterioration in electricity supply or more safety-related stoppages. Aquarius Platinum reported platinum production fell 19% in the March quarter because of power supply and industrial relations issues as well as a switch to owner-operated mining at its Everest mine. It expected a fourth-quarter improvement and for the full year production would be similar to last year's, at 520000oz-530000oz. Northam Platinum said in its interim results commentary in February it expected production in the second half to be similar to the first half's, when it dropped year on year by 16,5% to 150755oz. Impala Platinum said at the interim stage it expected its production loss due to electricity cuts to be limited to 20000oz this financial year. Bloomberg reported Barclays Capital forecast platinum would average $2100/oz in this quarter. It said SA's producers were still vulnerable to production disruptions caused by power outages and safety-related closures. GFMS director Paul Walker said Apri 24 he suspected demand for platinum from the automotive exhaust catalyst and jewellery sectors would fall more than expected this year in response to lower production. That would limit the market deficit, and perhaps even result in a surplus.

Rand Uranium Expects to Be in Global Top 10
Rand Uranium, the newly created company formed by Harmony Gold Mining and the Pamodzi Resources Fund, said April 17 it would become the world's ninth-largest uranium company when output starts in three years. Harmony CEO Graham Briggs also said the company had set its sights on listing on a major stock exchange, probably Toronto or London, with a dual listing on the JSE once it has begun production. Briggs was briefing the media and analysts visiting Rand Uranium's assets near Randfontein. Corporate activity in the uranium sector has stepped up in the past five years because of a steep rise in the spot price to a peak of about $138/lb last year from $10/lb in 2002, although the price has since fallen to $68. The main price driver is growing demand for alternative energy sources and dwindling supplies of uranium. Rand Uranium is 40% owned by Harmony (HAR) and 60% by Pamodzi Resources Fund (PZG), which is Africa's largest private equity fund, planning to invest $1,3bn in various assets in the next three years. The fund will allocate 10% of that investment to activities that create new direct jobs, sustain jobs by extending the life of mining operations, develop junior miners and source products from enterprises owned by blacks or women, fund chairman Ndaba Ntsele said. Harmony will realise about R1,9bn, at present exchange rates, from selling the fund a stake in its Randfontein gold and uranium assets, Briggs said. The deal has received competition authority approval and all other conditions should be met this quarter. The assets include the three Cooke underground shafts, now producing about 230000oz of gold a year, and a dump re-treatment operation producing about 40000oz of gold. If they continued to mine only gold, the first Cooke shaft would close next year and the last in 2019.The uranium resource is contained in a number of surface dumps, which have been extensively analysed by Harmony, and there is also uranium underground, not as well defined. The grade of uranium in the Cooke dump is about 0,215kg/ton, which is high compared with 0,05-0,07kg/ton in other companies' uranium surface dumps, Rand Uranium CEO John Munro said. Based on present estimates, about 185000 pounds of uranium a month could be produced at a cash cost of $30-$35/lb, he said. Those costs would be offset by gold income. About R1,7bn would be spent to build a uranium plant capable of processing 500000 tons of material a month and to prepare a new dump site. The company's operations will remove a major eyesore in the Randfontein area: the Cooke dump, containing about 83-million tons of tailings from past gold mining. The dump sits on porous dolomite rock, so there is potential leakage into groundwater. Once reprocessed, the material would be moved to another site away from dolomite, Harmony operations director Bob Atkinson said. Harmony was already one year into what was expected to be a three-year process to obtain permits for a new site. Several possible sites had been identified.

Uranium One Expects $87m in Aflease Deal
Uranium producer Uranium One said March 31 it would get $87m from the sale of its stake in junior miner Aflease Gold. In posting results for the year to December, Uranium One said it had sold 152-million shares in subsidiary Aflease Gold for about $40m in its strategy to dispose of non-core assets and focus on the operation and development of core uranium assets. "In line with this focus, (Uranium One) intends to divest several of its non-core assets, and expects to finalise a number of transactions during 2008," the company said. The buyer had an option to purchase the remaining 187-million shares for about $49m. Uranium One owns 67% of Aflease. The partial sale of Aflease is a culmination of Uranium One's long stated intention to dispose of the junior mining company so it can be a standalone listed entity. Uranium One said it expected a $90m loss in the first quarter of this year because of the deal. Uranium One said it expected to finalise the transaction this month. Aflease assets include the Modder East gold project, expected to begin production next year. Aflease is headed by Neil Froneman, who quit suddenly as Uranium One CEO this year. Aflease has said it is looking for listings either in North America or Europe within a year. Uranium One's share price on the JSE fell 14% yesterday to close at R27,52, a whisker away from a 12-month low of R27,50. Meanwhile, power shortages were unlikely to have a material effect on the costs of Uranium One's Dominion project, a shallow, underground mining operation in Klerksdorp, North West, the Canadian-based uranium producer said. Interim CEO Jean Nortier said diesel generators were on standby to ensure that underground operations were not interrupted by power outages. This year's precommercial production at Dominion was estimated at 590000 pounds of uranium, up from last year's 171300 pounds, the company said. Uranium One reported a net loss of $17,6m in the year to December. Cash and cash equivalents were $252,2m, up from last year's $61,8m.

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PETROCHEMICALS

Sasol Synfuel for Jet Aircraft Gets Aprova
Petrochemicals group Sasol had become the first in the world to receive international approval for its synthetic jet fuel derived from coal-to-liquids technology, to be used in commercial airliners, the company said April 9. Aviation stakeholders including airframe and engine manufacturers, airlines, authorities such as the International Air Transport Association and the UK's defence ministry had jointly given the approval. The high cost of oil has forced the global aviation industry to turn to alternative fuels, which the International Civil Aviation Organisation says may offer savings and price stability. Alternative fuels are also thought to be more environmentally friendly. The approval is a boost to Sasol's efforts to take its unique coal-to-liquids technology international. The move would also present SA and other countries rich in coal and natural gas with an opportunity to convert these natural resources into money, Sasol said. Sasol CEO Pat Davies said last night: "This approval recognises the absolute need to develop aviation fuel from feedstock other than crude oil in order to meet the world's growing needs". The move would integrate alternative fuel into the energy mix. The approval of its coal-to-liquids jet fuel "marks a significant development in the adoption of clean-burning alternative fuels for the aviation industry," the company said. Engine emissions from its jet fuel were lower than those of jet fuel derived from crude oil because of a lower sulphur content, it said. The group said it had already supplied a fuel mixture made up of a coal-to-liquid component, blended with kerosene derived from crude oil, to international airlines operating from OR Tambo International Airport. Davies said because the approval covered fuel produced at its Secunda synfuels facility in Mpumalanga, only airlines flying from OR Tambo International would benefit. "It makes logistical sense," he said. Sasol said jet fuel products from the Oryx gas-to-liquid plant in Qatar, the joint venture Escravos gas-to-liquid plant in Nigeria, and possible coal-to-liquids ventures in the US, China and India, would also be submitted for sanction. The facilities would serve airlines in their regions. Davies said the Qatar plant was likely to serve the Middle East and European markets.

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RETAIL

Food Chain Expands Globally

Shoprite, which already has a strong presence in Africa and a foothold in India, has secured sites for the development of two supermarkets in the DRC, as well as land in Lagos for a second supermarket. The company also aims to further extend its presence in Nigeria. Shoprite is already Africa's largest food retailer, with 1220 outlets in 17 countries across the continent, the Indian Ocean Islands and southern Asia. It is listed on the JSE, with secondary listings on the Namibian and Zambian stock exchanges. The group has 99 stores outside SA, of which four were opened last year. Its stores outside SA represent about 12% of both sales and trading profit in rand terms. In the six months to December, the group reported turnover up 21,7% from R19,1bn to R23,3bn, while trading profit grew 42,2% to R1bn. Shoprite's operations outside SA improved turnover 32,4%, with profit growth of more than 100%. CEO Whitey Basson says the group's South African operations are well supplemented by its businesses outside the country's borders. "We trade in 16 other countries, and virtually all of them posted excellent results. It is particularly our present focus on the oil-rich West-African countries that is reaping benefit." Evan Walker, a retail analyst at RMB Asset Management, says Shoprite's African operations seem to be firing on all cylinders, adding valuable profit. India, which is unprofitable at present, is the only dark horse in its stable, and Walker believes the company might pull out of the country. Basson says the company's African operations are mostly profitable, with only two stores reporting small losses, and these are expected to be eliminated shortly. In India, however, the company is still trying to get an indication of the best way forward after suffering "large" losses. Shoprite has experienced constraints in the Indian markets and is finding the environment volatile. Basson says one of the options is to find a local partner. In the six months to December, the company finally opened its first supermarket in Ghana, which had been delayed by a fire in the previous financial period. The store, in a modern retail mall in Accra, is exceeding expectations. The group has also said it will invest $80m in the DRC to develop two supermarkets in the major cities of Lubumbashi and Kinshasa. First soil was turned in Lubumbashi in December for a 14000'm shopping centre that will be one of two constructions taking place simultaneously. The centres are the first commercial developments of such scale in the DRC. The Lubumbashi store will be anchored by a Shoprite supermarket of about 5500m'. A total investment of about $30m is envisaged for the development. Construction will start in the second quarter of this year and is expected to be complete in mid-2009. The Kinshasa development is a retail shopping centre of about 24000m' and will be constructed by the Shoprite Group's locally registered company as part of a mixed-use development comprising residential, office and hotel components. In the first phase, a Shoprite supermarket of 6600m' as well as a centre of about 11000m will be built to provide about 18000m' of lettable space. The Kinshasa shopping centre will represent a total investment of about $50m and will initially have 400 parking bays that can be extended to a final capacity of 1100 bays in future phases. After rolling out the two flagship stores, the company will start with a roll-out programme. Each Shoprite supermarket is expected to employ about 150 permanent staff with at least 50 indirect opportunities for additional positions. Shoprite will also provide technical expertise and planting programmes for local small scale farmers. The retailer will provide the technical input to help the local manufacturers produce goods that meet international standards. In August, Basson said Shoprite was focusing on its stores outside SA in the year ahead. It had planned to open five more of these next year and was not "scared" to take risks. However, it would pull out of countries that did not meet expectations. Of its 190 stores in 16 non-South African countries, only stores in Mauritius, Madagascar and Tanzania were not profitable in the year to June last year. However, these losses were not significant, whereas Basson said India would take at least two-and-a-half years to become profitable in a difficult regulatory environment. Absa Asset Management Private Clients analyst Christopher Gilmour said there was potential for good margins on the African continent as Shoprite was targeting resource-rich countries where rapid growth has been forecast.

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TELECOMMUNICATIONS

Uganda Criticises Local Telecoms Policy

Uganda's technology minister has chided SA's government for meddling too much in the telecommunications sector, saying a lighter touch would grow the industry, cut the cost of services and help local companies to flourish. A hands-off approach would avoid the bureaucratic delays and corruption that occured when governments got invol-ved, said Alintuma Nsambu, Uganda's minister for information and communications technologies. "If you are going to make something successful, you have to keep governments away, because the moment you involve government you increase bureaucracy and there is often corruption." Nsambu was sharing a stage with SA's science and technology minister, Mosibudi Mangena, at the Satcom Africa conference in Johannesburg April 8 when he suggested that SA should rethink its telecoms regulations. Then he apologised for making his criticisms in public instead of discussing them in private. "I wish you had written to me privately," Mangena replied. Nsambu said governments should back off from playing an active role as the telecoms sector "must be run by highly skilled technicians, not by politicians". The government's role should be to support private companies by removing any bottlenecks, such as ensuring that officials did not need bribing to get things done or to allow equipment to clear customs. "Liberalising the telecoms sector means discouraging monopolies or duopolies," he said in a dig at SA, where Neotel was belatedly granted the sole licence that opened up competition to Telkom. Then he took another jab, saying the private sector should be left to build and operate undersea telecommunications cables. SA's government is already championing its involvement in at least two cable projects, and is jeopardising plans to increase Africa's bandwidth by insisting that private cables may land in SA only if they are majority African-owned. Nsambu attacked the high cost of internet access in SA, even though the country is not reliant on notoriously expensive satellite connections. "Ironically in SA the cost of internet usage isn't cheap," he said. Much of SA's international traffic is carried on the undersea Sat-3 cable, and Telkom has kept Sat-3 bandwidth prices artificially high. Full liberalisation of the telecoms sector was extremely important for any nation's economy, he said, as it provided consumers with lower prices, better customer service and faster internet access. Uganda had one of the most liberal telecoms policies in the world. Even first world countries could learn from it, Nsambu told the conference. In contrast, SA's policies were hindering the sector and the success of local operators. When MTN first bid to enter Uganda, his government had been suspicious of letting it operate there as it appeared to be struggling to win licences at home. A great deal of due diligence was carried out on MTN by the authorities, he said. "It took them a long time to convince us that in SA the regulations are that bad," Nsambu said. "Your government should provide such companies with a certificate to say the companies are good but they don't meet our requirements because we have our own regulations," he told Mangena. Mangena said the reproaches should be directed at SA's communications and trade and industry departments, not his science and technology department. "Nevertheless it's one government and if you have issues I'm quite prepared to pass them on to the relevant ministers." Mangena denied that progress in SA was shackled by the government's regulating undersea cables or by creating Infraco as a state-owned supplier of broadband infrastructure. Some areas could be liberalised further, but the regulatory environment laid the ground rules rather than inhibited progress, he said. Infraco was established because no other company could provide sufficient bandwidth fast enough to support the Southern African Large Telescope and to let SA bid to host the $1,5bn Square Kilometre Array radio telescope. "If there were private companies that came and said we can provide this bandwidth we wouldn't have Infraco," Mangena said.

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