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SOUTH AFRICA


  
  

 

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

Books on South Africa



Update No: 096 - (26/07/10)

South Africa deservedly savours pride
The soccer world-cup circus has left town and in the aftermath the nation is taking stock, on the whole pronouncing it to have been a success. This issue looks at much of the outfall of the international weeks, in which one of the most successful aspects was that the international following for the world’s most popular sport, and world TV had a good look at S Africa and its ability to organise such an immense event. They were undoubtedly impressed. But more than that, the world’s focus on the nation and its major cities has immensely improved the nation’s overseas image. Many of those who driven by the fixtures in different cities came to follow their national teams, will return for the unique vacations the country can offer. In addition, it will in future be taken seriously as a business destination by those apart from those in mining and minerals who know it well, previously might have thought it too raw or difficult a market.

The consequences for South Africa are not only an improvement in economic circumstances, but also the enhancement of institutions that real democracies take for granted, such as the necessity to tackle public corruption. S Africa has some way to go on that but the test perhaps is not does corruption exist, but more significantly how do wrongdoers answer for their crimes? Only then do public office holders really understand that they are there to serve, not to exploit, either alone, or together with a coterie of likeminded low-principled opportunists.

The big question that is being asked is can South Africa go a different and better route, having seen neighbouring Zimbabwe in the years since independence effectively implode, grinding down in every department of government, completely unable to modify the African big-man syndrome with the needs of a progressive 21st century nation state?

Other stories that follow in this month’s issue illustrate the point. Once a case in S Africa gets to court, then there is a good chance of justice. The courts in many ways are more sophisticated and professional than the political system which is suffering all the problems of immaturity. But there is another problem arising to haunt the seekers of justice. The press is beginning to fill up with stories of threats to the ‘whistleblowers’ and the dangers to them, particularly those who have been instrumental in bringing ‘the great ones’ to trial. This is a new democracy and these painful lessons are par for the course in such a situation. The nation has had to overcome big problems before these – and may have to do so again.

South Africa ex-Police Chief Selebi Jailed for 15 Years
A South African court has sentenced former national police commissioner Jackie Selebi to 15 years in jail for corruption August 3. Judge Joffe Meyer said "You were an embarrassment to the office that you occupied" Selebi, a former president of Interpol, was convicted in July of receiving bribes from a drug dealer. Convicted dealer Glenn Agliotti paid Selebi 1.2m rand ($156,000; £103,000) to turn a blind eye to his business. Selebi is the most senior official appointed by the country's government to have been convicted of corruption. The sentence is the minimum recommended for senior police officers found guilty of corruption. Judge Joffe Meyer in the South Gauteng High Court in Johannesburg described Selebi as "an embarrassment" and a "stranger to the truth" in the witness box. "At no stage during the trial did the accused display any indication of remorse. The accused lied and fabricated evidence in an effort to escape the consequences of his conduct," the judge said. Selebi was given 14 days to file an appeal. During this time he will be free on bail. Wearing a grey suit and a light pink shirt, Selebi sat and listened to the 45-minute judgement without showing emotion. Inside the courtroom there was silence when the judge handed down sentence. There was no reaction from Selebi's family, including his wife. Minutes after Judge Meyer Joffe's ruling, Jackie Selebi's brother George protested to scores of journalists outside court that his brother had been sentenced by "an apartheid judge". Prosecutors said they hoped the sentence would "send a strong message that corruption will not the tolerated". Mr Selebi refused to comment. But now the man who for eight years was responsible for leading South Africa's fight against crime is destined for jail. The 60-year-old was well connected in the ruling African National Congress government. He was also a former president of the ANC Youth League, served as South Africa's representative at the UN and was a close ally of former President Thabo Mbeki. "The fall that the accused already had must have been one of the greatest falls known in our legal history," Selebi's defence lawyer Jaap Cilliers told a court hearing on Monday, as a judge considered Selebi's sentence. Selebi's defence team had asked the judge to consider a suspended jail term and a fine. He has already forfeited 320,722 rand ($43,800, £27,500) as the proceeds of crime. But prosecutors said Selebi had shown no remorse for his actions. "We don't have a fallen angel here. A fallen angel admits when they make a mistake," prosecutor Gerrie Nel had said. During the trial the court heard how Selebi had spent thousands of dollars on shopping sprees with the money he was given by Agliotti. Agliotti, who gave evidence against Selebi in return for immunity on bribery charges, is himself on trial for murdering a mining tycoon. The media are now drawing attention to the threats to whistleblowers in the high proflle cases in progress. There is clearly a distance to go before the rest of S. Africa’s criminal justice system can catch up with the mature processes of justice once a case comes to court.

Zuma Link in Congo Oil Rights Case
While the World Cup has helped the investment climate, it also helped obscure some apparent skulduggery. The latest example involved, again, the family of President Jacob Zuma. On July 9, the Democratic Republic of Congo announced that two companies, linked to the Zuma camp, had won rights to two converted oil blocks in the northeast. The blocks have long been claimed by Tullow Oil, a remarkable Irish company responsible for many discoveries on the continent. Tullow called the granting of the blocks a "smash-and-grab" by the Congolese government, and may try legal action. Zuma's nephew, Khulubuse Zuma, and his lawyer, Michael Hulley, were the signatories for the contracts, which were registered to British Virgin Island companies, themselves registered to another British Virgin Island company. Transparent this is not. Khulubuse Zuma is also involved with Nelson Mandela's grandson, Zondwa Mandela, in Aurora, which took control of the Grootvlei mine in Springs after the previous owner, Pamodzi Gold, was liquidated. The Department of Water Affairs has laid charges against the mine for illegal pumping. But the company has disregarded labour regulations without consequences. It's hard to overestimate how bad this habit, of associating legal rights in resources with personalities and not in terms of law, is for African development. It's one reason why the battle between Kumba and Imperial Crown Trading is so important. A slip here, and SA will be classified alongside the Congo for policy on commodity rights. The result is that some resources are never exploited. Iron ore exists the world over, but only Brazil and Australia, and to a lesser extent SA, have mastered the ability to supply customers.

Attacks on Migrants
President Jacob Zuma has entered the debate on the threat of xenophobic attacks on migrants from other African states by calling on South Africans to "isolate and report to the police those elements who may be seeking to sow mayhem in communities." In a statement issued from his office in Pretoria July 15, he said the World Cup had demonstrated that South Africans were "warm, peace-loving and hospitable." Their support for Ghana and other African teams had displayed "African unity in its true sense." He added: "Let us isolate all elements who may have sinister agendas, who may want to create havoc and sow pain and destruction in communities, especially foreign nationals residing in our country. We appeal for calm, tolerance and unity amongst all." The South African government has been criticised for not speaking strongly enough against the threat of xenophobic attacks on foreign migrants since the end of the World Cup. Migrants living in poor communities, especially near Cape Town, have faced threats and harassment in recent days and many have fled their homes and businesses. South Africans without jobs accuse the migrants of undercutting pay levels and some shopkeepers resent competition from immigrants.

In a call to action, the Congress of South African Trade Unions (Cosatu) July 14 released an 11-point "declaration of commitment" aimed at harnessing the success that underpinned South Africa's hosting of the World Cup so as to address continuing development challenges facing the country. Addressing a media conference in Johannesburg, Cosatu general secretary Zwelinzima Vavi said South Africans had to demand "justice for themselves and their children", hence the need to maintain the current levels of unity and use it to "confront the many challenges facing South Africa". "The bar has been set high now. South Africans are correct to demand the same South Africa we saw over the last four weeks - swift and efficient delivery. We have seen that it can be done and we will accept nothing less," he said. The declaration is based on the need to sustain the positives beyond the World Cup and build on the efficient services - speedy justice, effective policing, reliable public transport, racial unity and leadership - which contributed to the successful staging of the soccer spectacle that kept the world's eyes fixed on South Africa for a month. Cosatu also plans to involve broader civil society beyond the tripartite alliance and will be talking to business, prominent individuals and civil society organisations to join them in the campaign to get South Africa working better and free of corruption.

Four white South Africans have been fined $2,700 (£1,700) each for making a video humiliating five black university workers and posting it online. The former students at the University of Free State pleaded guilty to criminal injury at the trial July 27. The video showed the five staff being made to kneel and forced to eat food which had apparently been urinated on by one of the students. The video sparked anti-racist protests when it surfaced in 2008. The trial was seen as deeply symbolic in a country trying to come to grips with its racially divided past, 16 years after the end of white minority rule. The four were also given six-month prison terms, suspended for five years on condition they are not found guilty of discrimination during that period. The fines of 20,000 rand were higher than that requested by the prosecution. "It sends a strong message to potential offenders of similar crimes," said magistrate Mziwonke.Hinxa in the mainly white town of Bloemfontein. If the four do not pay the fines, they face 12 months in jail. The five university workers had asked that the four should be fined, rather than jailed. But the workers - four women and a man - are expected to launch a civil case for damages now that the criminal case is over. Last year, the first black director of the University of the Free State, Jonathan Jansen, courted controversy by inviting the students back as a gesture of reconciliation. His decision was condemned by both the ruling African National Congress and opposition parties.

Dwindling support, leadership squabbles and perpetual disorganisation have thrown a shadow over the long-term sustainability of the Inkhata Freedom Party(IFP). This is the assessment of Zakhele Ndlovu, a political analyst at the University of KwaZulu-Natal, after the IFP's recent, very public, leadership battles. "I think this is the beginning of the end. "The IFP is in serious trouble, it is a sinking ship and the captain has failed dismally," said Ndlovu. He said IFP leader Mangosuthu Buthelezi was "turning the party into something that belongs to him, instead of making it an organisation for the people". In recent by-elections in northern KwaZulu-Natal the IFP lost to the ANC in uMhlathuze municipality in Richards Bay and uMthonjaneni municipality in Melmoth, both previous IFP strongholds. The party also incurred significant dents in its traditional support bases in Nongoma and Ulundi, where it respectively polled 74.68 percent, compared with 92.24 percent during the 2006 local government elections, and 61.84 percent, compared with 81 percent four years ago. In his online publication, Buthelezi recently said the IFP's "demise" would be a blow for multiparty democracy in South Africa. While support is already fading - the IFP support halved in the past national election.

The South African Reserve Bank (SARB) has kept interest rates unchanged at 6,5% following its three-day Monetary Policy Committee (MPC) meeting. SARB governor Gill Marcus said the MPC feels the present policy stance is appropriate to deal with current economic challenges in the market. "The main upside risks to the inflation outlook continue to emanate from cost-push pressures, particularly recent wage settlements and high levels of administered price increases. As such the monetary policy committee has decided to keep rates unchanged at 6,5%", Marcus said. The Governor also made special mention of the weakening of the Rand which has been touted by many analysts. She pointed out, however, that the Reserve Bank has no specific target for the Rand's value. Marcus said that any move to tamper with the currency's value will not necessarily achieve positive results. "There is no point in a weaker currency when the benefits will be eroded by inflation," she said. Along with her comments on the Rand, Marcus forecast growth for 2010 in the region of 2,9% - mainly due to a slow-down in the manufacturing sector. Compared with the same month last year, consumer prices rose by 4,2%, slowing from 4,6% in May and well below consensus forecasts for a 4,5% increase. Inflation rose much more slowly then anticipated in June, in a trend which could back the case for a further interest cut, and ensures that interest rate hikes are a long way off.

The International Monetary Fund (IMF) has revised upwards its growth forecast for South Africa this year, in line with more upbeat estimates for the rest of the world. Finance Minister Pravin Gordhan said July 8 that the pace of growth "probably moderated" in the second quarter, but South Africa still stood to achieve more than the 2,3% for this year projected in the February budget. Growth in the first quarter was 4,6% up from 3,2% in the fourth quarter of last year. "We have seen a gradual improvement in economic conditions. The pace of growth probably moderated somewhat in the second quarter," Mr Gordhan said. He said South Africa still stood to achieve more than the Treasury's 2,3% forecast, after contracting 1,8% last year. The IMF said South Africa's economic growth was likely to reach 3,2% this year, up from an estimate of 2,6% published in April, said Alfredo Cuevas, the IMF's senior resident representative in South Africa. "The recovery in South Africa has been stronger than expected, and we don't see ourselves making major revisions to the forecast at this point," he said

Now a Season of Strikes?
As many as 900,000 South African public sector workers are likely to strike to push for higher wages, a group of unions said. It is crunch time for Public Service and Administration Minister Richard Baloyi and public sector unions after Mr Baloyi August 3 gave unions an ultimatum to accept a 6,5% wage increase and a R630 housing allowance or have the state unilaterally impose it on them. The unions rejected the offer again August 3, saying they were gearing up for a strike August 9. If state employees - teachers, nurses, police officers and administrators - go on strike, it would put strain on the operations of government departments, affect service delivery and cripple the country's economy. Dumisani Nkwamba, spokesman for the Department of Public Service and Administration, said that it was in the public interest for unions to accept the final offer. "The minister gave the unions an ultimatum to accept the offer. It is in the best interest of the unions to accept the offer or we will implement it without them," he said. Sandile July, labour expert and director at Werksmans, said that if the strike went ahead, the unions should act responsibly, making sure that essential services remained uninterrupted. The current public service strike could impede the country's recovery from the economic downturn, the South African Chamber of Commerce and Industry (SACCI) has warned. Workers at state power utility Eskom won a 9 percent pay increase early in July after threatening to strike during soccer World Cup. Transport sector workers won a similar settlement in May after a three-week strike that cost nearly $1 billion in lost production and sales. Wage hikes could add inflationary pressure to the economy, which has been recovering over the past several months from its first recession in 17 years.

Public Service Strike Mounts as Offer Rejected as Insult
Public sector unions August 1 rejected Public Service and Administration Minister Richard Baloyi 's call for them to accept the government's final wage offer of a 6,5% increase and a R630 housing allowance, vowing to press ahead with their strike. The Public Servants Association, which represent s 200000 employees, will resume strike action while the South African Democratic Teachers Union (Sadtu), representing 243000 teachers, will begin a series of lunchtime pickets. The Democratic Nurses Organisation of SA (Denosa) is expected to down tools from August 5. The consequences of 1,3-million state employees -- teachers, nurses, police and administrators -- going on strike is likely to strain the operations of government departments, ports of entry, hospitals and traffic departments. It will also come at a great cost to the broader economy. Mr Baloyi urged labour to consider the final offer, saying that it was reasonable and fair, given the implications for all of SA's people. "The offer as tabled by the employer… is a reasonable and fair offer, given the trends developed in relation to how the state determines salary increases. The trend informs us of a salary adjustment that is based on inflation for the period under discussion plus a moderate real wage increase," he said. The unions have rejected the offer outright. "We are calling upon the employer not to insult workers with such a ridiculous offer of a mere R10 from R620 to R630 for housing allowances and an unacceptable 6,5% for salary increases," said Sadtu general secretary Mugwena Maluleke August 1. "A R10 improvement to the allowance is ridiculous and makes a mockery of the collective bargaining and cannot be taken seriously." Denosa spokesman Asanda Fongqo said it did not view the government's final offer as a revised offer. "I don't think the employer is serious about averting the strike." The Congress of South African Trade Unions said it would put pressure on the government to come up with a "realistic" offer. Meanwhile, the African National Congress (ANC) has warned that increases above the inflation rate could cripple the country's economy. "Our interest is to see the strike being averted to avoid any collapse of public services. At this stage we would like to give the negotiation processes a chance," said ANC spokesman Brian Sokutu.

Cosatu Mulls Joining Public Service Strike
The Congress of South African Trade Union's (Cosatu's) public service unions are still deciding whether or not they will join a strike by other unions in the sector against a general pay hike offer by the government. However, the prolonged decision may only be due to inefficiency and not an issue of a lack of support. Labour analyst Andrew Levy said July 26 that the only thing "stopping a strike from beginning soon" would involve a major revised offer above the government's 6,5% general pay increase offer. "I believe a strike is very likely. The government has said it would make a revised offer but the unions have been waiting for ages. "The decision to strike is not made on a Cosatu level but rather by workers themselves," he said. Mugwena Maluleke, a Cosatu spokesman, said that the group's major unions - the South African Municipal Workers Union, the Democratic Nursing Organisation of SA and the Police and Prisons Civil Rights Union (Popcru), which represent about 56% of the unionised members of the country's 1,3-million public service workers - still needed to consolidate their mandates with Cosatu. The non politically aligned Public Servants Association (PSA), which has about 210000 members, announced that it would strike from July 29, while the National Union of Public Service and Allied Workers (Nupsaw) said it would strike from August 1. The PSA and Nupsaw, along with the Cosatu unions, have been demanding an 8,6% pay hike. However, Cosatu may still see space for a resolution without turning to such drastic action as a strike, according to labour analyst Tony Healy. "Cosatu unions are normally much more aggressive than this when it comes to strikes. "It is very unlike them to prolong such action for months as they have done, especially when we have seen wage increases of nearly double the 6,5% offered by government in other sectors like transport," he said.

Look Beyond the World Cup for Prosperity
It is understandable that many South Africans are still basking in the glory of a successful Fifa World Cup. Less comprehensible is the government's insistence that the cup has brought unequivocal gains to SA's economy. It takes a moment's thought to see that such claims are at best premature. Some costs and benefits can be estimated, but most of the tournament's consequences are hidden, intangible, or long term. The event has left behind a large number of elephants, some of which are white. Transport systems introduced specifically for the cup supported 1,4-million journeys, but most passengers were international visitors and middle-class South Africans. It is hard to see how these systems can be made affordable to ordinary citizens. The Gautrain is a "white economic empowerment elephant” that has brought riches to the established construction industry. The Gautrain was conceived before the World Cup was secured, so its cost of perhaps R30bn - about the same as the stadiums - is never accounted as a tournament expense. Subsidies that could amount to R1bn a year to keep the system running are also ignored, because the government includes the Gautrain only on the positive side of its ledger of World Cup legacies. The stadiums themselves are beautiful works of art. At a Soccer City event hosted by the International Marketing Council and the Financial Times, however, panellists fell silent when asked to list possible uses for the venue. It was left to Johannesburg mayor Amos Masondo to suggest that the giant arena could be used for large weddings. As cynics predicted, the government will soon be paying the rugby federations to take charge of these wonderful, but massively expensive, creations. There have conceivably been "intangible" benefits from the Cup. International investors supposedly see the country through fresh eyes. Psychological barriers between races have allegedly been shattered. A sense of national possibility has perhaps been recreated after three years of relentless negativity. There are three reasons why enthusiasts are so keen to proclaim the World Cup an economic success right now. First, the national general council of the African National Congress (ANC) is in August, and the future of presidential white elephant Jacob Zuma, still hangs in the balance. A successful tournament boosts his chances of survival, even if the whole ANC knows the majority of the work occurred on former president Thabo Mbeki 's watch. Second, SA's construction industry and its embedded ANC cronies are lobbying hard for more easy money. Third, KwaZulu-Natal interests are hoping to replicate the remunerative elements of the World Cup bid, but on an altogether bigger scale. Instead of a Gauteng-style toy train, they propose a high-speed rail link between Johannesburg and Durban. Sceptical citizens are told not to count the costs because it is all needed for the Olympics. The multipurpose Moses Mabhida Stadium was conceived all along as the plausible centrepiece of an Olympic bid. According to the adherents of ‘Blatternomics’, even bidding for a mega-event brings economic benefits - albeit ones of the so-called "intangible" kind beloved of event entrepreneurs. There were 90 000 fans and 22 players at Soccer City for the World Cup final, and they had to be there for 90 minutes. SA has 12-million schoolchildren and 380 000 teachers in 26 000 schools and they have to teach and learn for every day of every school year. Although a country addicted to fast money and political roller-coaster rides does not want to believe it, the presence or absence of concerted responses to such more mundane challenges will determine the future prosperity of the nation.

World Cup's Boost for GDP Higher Than Expected
Government estimates that the 2010 the FIFA World Cup added a percentage more to the country's growth, when spending on stadiums and infrastructure was taken into account. Initially Government estimated that the World Cup would add 0.5 percentage points to annual growth this year. However, Finance Minister Pravin Gordhan told guests at a dinner hosted by the International Marketing Council July 22 "When we take account of the spending on stadiums and infrastructure since 2006, we find that the level of GDP is about 1 per cent higher than it would have otherwise been." In addition he said the tournament undoubtedly boosted the country's standing internationally, showcasing its capabilities in delivering world-class infrastructure on time and without imposing a financial burden on the national fiscus. National government put in some R33 billion into preparations for the World Cup, which Gordhan said was an investment that formed part of a long-term development plan for the country, rather than funding a once-off event. "We must also remind ourselves that what government was able to put into this project came from the taxpayers of this country, both in the business sector and as individuals, and it is to them also that the credit must go. Hosting the 2010 FIFA World Cup acted as a catalyst for expanding our infrastructure base, skills development, employment creation, and economic growth." He said the successful hosting of the tournament had shown that South Africa could rise to the challenge of hosting the biggest sport on the planet. "The narrative about South Africa in the international media during the tournament suggests that we did close that gap. Reporting on South Africa has been the most positive since our successful transition to democracy in 1994.” "But the most important legacy of the World Cup is the renewed confidence in ourselves as a nation that the hosting of the tournament has brought about." said the minister.

Was the World Cup Worthwhile?
The postmortem reports on the Fifa World Cup 2010 will no doubt continue for some time. And that is fair enough -- this was a huge event for South Africa, arguably second only to the first democratic election in 1994, so it is only right that the tournament should be thoroughly examined before it is finally laid to rest. So was it all worthwhile? The government certainly seems to believe so, which a cynic might point out is hardly surprising given that many of the governing elite and their friends and families treated the World Cup as an opportunity to party for a month at the taxpayer's expense. Cynicism aside, there are clear indications that the goodwill South Africans of all colours and classes exhibited towards each other during the honeymoon period after 1994 has made a welcome comeback as a direct result of the World Cup. With the benefit of hindsight, the interracial tolerance and willingness to compromise that characterised the heady Mandela era were discarded far too easily when Thabo Mbeki was appointed president and chose to place more emphasis on the issues that divide South Africans. But the World Cup has provided a golden opportunity for President Zuma to prove himself, and for that he should, oddly enough, be grateful to Mr Mbeki. The fact is that it was the former president's vision of an African renaissance, with SA leading the charge to prove to the rest of the world that the continent was not destined to disappoint in perpetuity, that resulted in SA persisting in the bid to host the tournament. One of the hopefully lasting legacies of the World Cup is that South Africans were forced to see their country through the eyes of the rest of the world, and the result was the breaking down of hitherto impenetrable barriers. Soweto was a place to be feared from the perspective of many white people before the World Cup; all it took was a displaced rugby game and allowing themselves to be swept up by the football spirit for that mental block to be overcome. We all embraced the national team, and even indulged in a bit of continental jingoism in backing Ghana, and for the first time since the late 1990s it felt like the natural thing to do. Looking at the event from an economic perspective, Finance Minister Pravin Gordhan has done an informal cost-benefit analysis and concluded -- surprise! -- that the numbers pretty much balance. That is not to imply he has fiddled the books, just that there are too many intangibles to be able to come to any hard and fast conclusions, especially this early. Who can say with any authority what the opportunity cost will turn out to be of the decision to spend billions of rands on nonessential infrastructure such as stadiums rather than, say, education? Similarly, the social benefits of uniting the country around football have to be weighed against the cost of prioritising a game over pressing needs, such as housing. That said, it would not be difficult to argue, in fact, that we did not spend enough money on the Cup. It is undeniable, though, that having the eyes of a sceptical world on us produced a degree of focus and determination to meet deadlines that was previously lacking, and bequeathed upon us sorely needed infrastructure that might otherwise have become bogged down in squabbling over black empowerment, the awarding of tenders and petty politics. Fifa World Cup 2010 has opened the eyes of the world to what South Africa has to offer, while simultaneously reminding South Africans what is possible. It is a sublime combination, rich with opportunities we dare not waste.

Secrecy Bill Declared 'Fully Constitutional'
Despite a raft of objections to the government's "secrecy bill", chief state law adviser Enver Daniels July 27 declared the bill fully constitutional and has dismissed some of the submissions as "emotional and hysterical". Significantly, Mr Daniels also emphatically rejected the numerous calls for a public interest defence for journalists and whistle-blowers exposing wrongdoing by the state. He said this meant anything could be published without taking consequences into consideration. Harsh minimum sentences are imposed in the bill for those caught making public classified information. Detailed submissions from, among others, the South African National Editors' Forum, Print Media SA, the Mail & Guardian and the Institute for Democracy in SA (Idasa), called for a public interest defence to be included in the bill to protect investigative journalism from being shut down. Mr Daniels, briefing Parliament's ad hoc committee on the Protection of Information Bill, also rejected suggestions that the definitions of national interest and national security as contained in the bill were overly broad. He said that if a simple, one-line definition had been used then the bill would easily have been labelled arbitrary. Criticism has been that broad definitions will allow almost any government document to be classified. The fact that the committee gave Mr Daniels free rein to shoot down the submissions in its first meeting after the hearings seems to indicate there is little room for substantive changes to the bill. In a separate development, the manager of Idasa's Political Information and Monitoring Service, Judith February, wrote to National Assembly Speaker Max Sisulu, noting that some senior members of the ad hoc committee had not attended a single meeting, thus harming the committee's ability to deliberate effectively on the bill. She said that Vytjie Mentoor, Johnny de Lange, Annalise van Wyk, Mbhazima Shilowa and Mario Oriani-Ambrosini had not attended all the meetings. Ms February said: "Several concerns arise from their absence. We are concerned at the possible implications of their absence, both procedurally, as well as the impact this may have on substantive issues of law and process. We were disappointed with the tone of the hearings and the shallow questioning. "In view of the far-reaching implications of the bill, Idasa is concerned that, in these circumstances, Parliament will be unable to do justice to its responsibilities."

Call for Special Courts in Xenophobia Cases
The South African Human Rights Commission (SAHRC) has recommended that the government set up special courts to deal with xenophobia-related cases. The commission made this recommendation to Parliament's portfolio committee on justice and constitutional development July 21 when it presented its findings on research into the aftermath of the 2008 xenophobic attacks. It recommended ways of dealing with similar incidents in the future. The national report is titled "Report on the rule of law, justice and impunity: institutional responses to the 2008 violence against non-nationals". It was based on information gathered in Gauteng, KwaZulu-Natal and the Western Cape, and focused on how "impunity undermines the rule of law". In the Western Cape, the research was conducted in Masiphumelele. Among the critical issues listed by the SAHRC's Joyce Tlou was the need for special dedicated courts, "like the ones we had for the World Cup". Tlou told the Cape Argus that it was merely a recommendation which could assist in the event of another violent xenophobic outbreak similar to the attacks of May 2008. A hotline, including a widely publicised central number people could call, was recommended to assist as an early warning system. The report found that victims of xenophobia had not received proper justice because there were so few convictions related to the attacks. The report said cases related to the 2008 attacks were hindered by delays brought on by case flow management, a shortage of investigators, reduced forensic and court capacity, as well as a lack of available interpreters. It also found that there was a poor relationship between the affected communities, police and the judicial system. Confidence in the system was undermined because the police were seen as unresponsive, with some of them being labelled corrupt and co-operative with local criminals. Tlou said that the accusations levelled against police were "dangerous" because they diminished confidence in the police. The report also noted that foreigners raised incidences of misconduct among police. "Although individuals raised it, when we followed it up no cases were opened (with the Independent Complaints Directorate)." The report also found that: Reintegration of those displaced did "not occur consistently, or sustainably", and was not adequately monitored. Some progress was made in light of possible future attacks, but effort needed to be made to maintain the progress. Security forces were not able to stop the attacks from spreading before people were displaced and property destroyed. The commission recommended that the police and the SA Defence Force develop guidelines for future co-operative service. They said there was a need for police to "boost deployment of back-up units in social conflict situations".

Archbishop Tutu Closes an Impressive Chapter
Nobel Peace Prize winner Desmond Tutu announced July 22 that after his 79th birthday on October 7, he would start limiting his time in the office to one day a week until the end of February 2011. After that, he said, he would withdraw entirely from public life. An upbeat Tutu, who cracked jokes and laughed at some of the questions posed, said he had already retired twice: once, in 1996, as the Archbishop of Cape Town, and again after the Truth and Reconciliation Commission had been completed. "But my mission determined that I continue to work and my schedule has grown increasingly punishing over the years." Asked whether he was in good health, Tutu, who has previously been treated for prostate cancer, said: "I'm not going to keel over any time soon." His said his plans post-retirement were to "sip rooibos tea with my beloved wife (Leah) in the afternoons, to watch cricket and to travel to visit my children and grandchildren rather than to conferences, conventions and university campuses". "I think I've done as much as I can, and really do need time for the other things that I have wanted to do." Tutu said he also planned to catch up on his reading. Of his time in the public eye, he said: "It's been fun, but I've not stopped being a township urchin. Even when I was sitting in the Oval Office, I kept pinching myself, saying: 'Is it really me?' " He said his family had always kept him grounded. "I've got a wife and family who helped keep my head right. They reminded me: 'You are just our daddy and husband'." Asked if he would miss public life, he said: "I've been very blessed. (But I) won't care not being in the public eye." He said he would no longer be available for media interviews, telling the journalists assembled at St George's Cathedral: "Don't call me, I'll call you." Tutu was born in Klerksdorp in 1931. His father was a teacher, and after matriculating from Johannesburg Bantu High School, he trained as a teacher at Pretoria Bantu Normal College. In 1954, he graduated from the University of South Africa. After three years as a high school teacher, he started studying theology, and was ordained as a priest in 1960. From 1976 to 1978 he was Bishop of Lesotho, and in 1978 became the first black General Secretary of the SA Council of Churches. Tutu has an honorary doctorate from a number of leading universities in the USA, Britain and Germany. He and Leah have four children.

Nelson Mandela Celebrates His 92nd Birthday
Surrounded by members of his family Nelson Mandela celebrated his 92nd birthday July 19 at his home in Houghton, Johannesburg. Mr Mandela started off his day by receiving visits from old friends including former Zambian Prime Minister, Kenneth Kaunda. Various other invited guests brought him gifts and cards. He was later serenaded by a large group of his grand-children and great-grandchildren, most of whom wore Nelson Mandela Day t-shirts to mark the first United Nations Nelson Mandela International Day. Many of Mr Mandela’s family had been out volunteering at community projects before they arrived at his private birthday party. After singing “Happy Birthday dear granddad” the children were joined in their applause by the man of the moment. After two of his youngest great-granddaughters tried unsuccessfully to blow out the candles themselves, they helped by a group of older ones. Mr Mandela and his wife Graca Machel also celebrated their 12th wedding anniversary. They were joined at the private celebration by his second wife Mrs Winnie Madikizela-Mandela. Before the main party got underway in a marquee erected in the garden, prayers were said by various ministers of religion. The occasion also marked a commemoration of the passing away since the 1940s of various members of the family. These included Zenani Mandela junior who was killed in a car accident at the age of 13 on 11 June; Mr Mandela’s daughter Makaziwe with his first wife Evelyn Mase who passed away in 1946 after an illness at the age of nine months; Mandela’s eldest son Thembekile, 24, who was killed in a car accident on 13 July 1969; his second and remaining son Makgatho, 54, who died of complications of AIDS on 6 January 2005.

Madiba Thanks Public for Supporting Mandela Day
The Nelson Mandela Foundation on behalf of Madiba has thanked the public for making Mandela Day a resounding success. The former president celebrated his 92nd birthday under this year's theme "Make everyday a Nelson Mandela Day." South Africans across the country joined the international community by giving 67 minutes of their time to do something good in honour of the 67 years that Madiba dedicated to the public service. The Foundation's information communications manager, Sello Hatang said: "On behalf of our Founder, Nelson Mandela, the Trustees and Staff of the Nelson Mandela Foundation, we would like to thank all members of the public for making Nelson Mandela International Day 2010 such a resounding success." Mandela Day activities were undertaken by people from all walks of life such as renowned actor Morgan Freeman who erected a fence at an AIDS centre in Khayelitsha, to women's associations preparing meals for the needy or schoolchildren donating bread and preparing sandwiches for a local soup kitchen. From corporates whose staff planted vegetable gardens, provincial government staff spending time with child-headed households, to organisations educating children about the dangers of drugs and others who spent their 67 minutes tutoring disadvantaged communities in subjects such as mathematics - all was done in celebration of the man who spent 67 years of his life fighting for others. Internationally, Mandela Day was marked by awareness creating events in cities such as New York, Madrid and London, while untold numbers of people everywhere gave 67 minutes of their time to make the world a better place for all. "It was particularly gratifying to see the huge number of individuals who took the initiative to contribute to communities and charities in a meaningful way. "This is for us the essence of Mandela Day. The Nelson Mandela Foundation will collate all these efforts and publish a report within a few days. "We would like people to remember that Every Day should be a Mandela Day. Let the wonderful work that people have done with and within communities continue, and people and organisations should establish ongoing relationships with the various charities that they assisted," Hatang said. He said for the Nelson Mandela Foundation, the Mandela Day campaign continues.

Wasteful Spending Hits R1,5 Billion – DA
The Democratic Alliance (DA) has charged that wasteful spending by President Jacob Zuma 's administration has soared to R1,5bn in the past year, with about R500m misspent in the past three months alone. The DA has been running what it calls its "wasteful expenditure monitor" for the past year and the total is now almost R1,5bn spent on items such as luxury cars, prolonged stays in five-star hotels, tickets to major sporting events, self-congratulatory advertising, and lavish parties at top-end restaurants with no benefits for ordinary South Africans. DA spokeswoman Lindiwe Mazibuko said July 15 the spending over the past year was contemptuous of Finance Minister Pravin Gordhan's instruction that departments and state entities should tighten their belts and only spend on necessities. She claimed that 12 months of research by the DA, garnered from replies to parliamentary questions and news reports, showed that the department with the highest wasteful expenditure was public works with R99m spent on the refurbishment of residences of officials. The most wasteful provincial government was the African National Congress-run KwaZulu-Natal, which had spent R120,5m on a variety of items from unnecessary rental space, to luxury cars and artworks. Ms Mazibuko said: "The biggest-spending single state- owned enterprise was the SABC, which, despite being in dire financial straits, wasted R23m on unnecessary rented space and a propaganda video praising President Jacob Zuma." She said Defence Minister Lindiwe Sisulu was responsible for the biggest expenditure on cars since the wasteful expenditure monitor's last report in April. About R7m was spent on four Mercedes-Benz E-class cars. Transport Minister Sbu Ndebele was named for spending on World Cup tickets, with entities reporting to him spending R20m. Communications Minister Siphiwe Nyanda was held responsible for "the biggest spend on unnecessary luxury hotel accommodation, treating himself to prolonged stays at the five-star Mount Nelson Hotel and Twelve Apostles Hotel in Cape Town at a total cost of R515 000 to the taxpayer." The most expensive party award went to suspended director-general in the Department of Labour, Jimmy Manyi, who reportedly spent R350 000 on a year-end party. Ms Mazibuko said: "This kind of spending represents a gross misallocation of public funds and brings no benefits to the South African people. R1,5bn is equivalent to 50% more than the entire housing budget for the Department of Human Settlements in the North West province (R985,6m) and 100% more than the school nutrition programme budget for the Eastern Cape education department (for) 2009-10 (R486,7m). "If these funds had been spent wisely, they could have provided over 1,1-million people affected by HIV/AIDS with the care they need to stay healthy. R1,5bn could have provided bursaries for 50000 students to pay for the first year of tuition in a BCom programme, R1,5bn could also have been used to provide electricity connections to over 185000 low-cost houses across the country," she said. Attempts to get government comment were unsuccessful.

Semenya Can Compete as a Woman IAAF
World 800m running champion Caster Semenya was cleared to compete as a woman July 6 - nearly a year after she was suspended from top-level competition pending the results of gender tests. In a tersely worded statement, the International Association of Athletics Federations (IAAF) said the gender testing process begun last year had now been completed. "The IAAF accepts the conclusion of a panel of medical experts that she can compete with immediate effect," the statement said, adding that the medical details of the case would remain confidential. It remained unclear why that process - which included chromosomal, psychological, gynaecological and chemical tests - took almost 11 months to complete. Semenya shot to international fame last August when she obliterated the field in the 800m at the World Athletics Championships in Berlin. The win followed mounting speculation that the then 18-year-old had male characteristics, provoked by her muscular build and a sharp improvement in her running times last year. The IAAF confirmed the day before the final that Semenya would be subjected to gender tests. Although she was allowed to compete in the final in Berlin, she was subsequently excluded from competition until the results of the tests were known. Apart from its effects on Semenya's development as a runner, the lengthy suspension has prevented her from earning potentially lucrative sponsorship revenue and prize money. But her spokesman, Tsepho Seema, said that Semenya had no plans to take legal action against the IAAF.
"All Caster has ever wanted to do, as she's always maintained, is to run. I don't think that she has any intention to take people to court - she hopes she can pick up from where she left off." Seema said Semenya had been working hard on the track during her absence from professional competition, as well as in her charitable project for athletes from poor backgrounds. She was excited to have been cleared to run, and had identified "a couple" of events where she planned to compete.

Survey - South Africa is One of Best Emerging Markets for Business
South Africa's economy has been vindicated as one of the most attractive emerging markets in which to do business, a World Bank research survey showed July 29. This key assessment of SA's business environment puts the country in a prime position to attract more foreign direct investment than other emerging markets. SA ranked third, after Thailand and Malaysia, out of 12 countries regarding the business community's perceptions of conducting business in the country. Significantly, SA outperformed larger economies such as those of China and Brazil. India, a powerful emerging economy, was not part of the assessment, which was conducted in 2008. Chile, Mexico, Colombia, Kenya, Argentina, Nigeria, Brazil and Senegal were the other emerging markets assessed. "SA's business environment compares favourably with its peers," a World Bank senior economist and lead author of the report, Taye Mengistae, said July 29. However, crime, access to finance for small business, skills development and the productivity levels of the workforce remained SA's weak areas. Crime was the only concern that had been consistently highlighted as a negative force that deterred investment locally, Trade and Industry Minister Rob Davies said. The survey indicated that, on average, crime was costing businesses about 3,2% of turnover a year. Martyn Davies, CE of research consultancy Frontier Advisory, said that "crime was an enemy within and has torn society apart". SA's economy should not be "consumption driven but rather growth driven", but he was nevertheless optimistic about SA's economic outlook. In previous surveys, the investment community was concerned about SA's macroeconomic policy, labour legislation, crime and the development of skills. These concerns, except for crime, had now shifted to corruption, electricity supply (because of Eskom's power outages) and access to finance for small business. The chief economist of Econometrix, Azar Jammine, said African economies' growth, with the exception of SA's, "exceeded the world's economy by 1%" last year. Mr Jammine attributed SA's slow growth to a lack of skills, which was "eroding" economic performance. "We are falling further and further behind on skills development with the rest of Africa," he said. Of the small enterprises surveyed, only 17% indicated that they had access to a credit facility. Industrial Development Corporation chief economist Lumkile Mondi said: "SA is no different to other countries on the score of access to finance" for small business.

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AUTOMOBILES

Growth of 20 Percent in New Car Sales 'Indicates a Buoyant Market'
New vehicle sales grew 20% to 41367 year on year last month from 34472 in the corresponding period last year, the National Association of Automobile Manufacturers of SA (Naamsa) said August 3. However, June's year-on-year improvement was below the 23,3% growth for the first seven months of this year and had grown from a very low base. Nevertheless, car companies felt the aftermath of the Soccer World Cup had buoyed new vehicle sales last month . Dean Stoneley, marketing director at Ford SA, said: "While second-half sales were expected to be slower than leading up to the World Cup, July numbers indicate a buoyant market driven by dealer sales." Ford's new Figo car sold 598 units to entry-level buyers in June, driving the passenger car performance 13,4% up on last month. "Affordability remains an important aspect of new vehicle purchases in SA," Mr Stoneley said. Naamsa echoed this, noting that aggregate industry new car sales in June exceeded expectations, with the average daily selling rate of new cars remaining robust. However, in contrast to the relatively buoyant car market, sales of new light commercial vehicles, bakkies and minibuses declined. The rate of growth in new vehicle sales was anticipated to moderate. Aggregate domestic sales this year were projected to expand about 15%, while export sales were projected to grow about 30% in unit terms. "Factors that would influence domestic sales volumes during the remaining months of the year included the overall performance of the domestic economy, the inflationary consequences of the impending carbon tax, and the outcome of the collective bargaining in various sectors of the industry," Naamsa said. It noted that Volkswagen SA (VWSA) was the frontrunner in the passenger car market with sales of 6949 cars and a resultant market share of 23,8%. "The new Polo Vivo achieved record monthly sales of 3141 units and thereby firmly entrenched itself as SA 's favourite car brand since its introduction to the market in March of this year," said VWSA's Mike Glendinning. Nedbank economist Johannes Khosa said vehicle sales were likely to stay firm during the remainder of the year as general economic conditions continued to improve. "In particular, consumer confidence will be supported by low interest rates and income growth which, combined with easier credit criteria, should underpin car sales. "Although commercial vehicle sales should also increase off a very low base established in 2009, the overall recovery will be subdued as the private sector remains reluctant to invest, while ample spare capacity and budget constraints will probably result in slower growth in infrastructural spending," said Mr Khosa

Toyota to Boost Local Content to 70 Percent
Toyota SA planned to increase its local content from 45% to 70% as part of an intense localisation programme to strengthen its market position, CEO Johan van Zyl said July 15 at the company's midyear review. "The automotive industry needs to be supported by a strong local component industry and local manufacturing base. "Exports would increase and greater beneficiation would be encouraged," he said. Toyota SA's goals were aligned with the Automotive Production and Development Programme (APDP), which focused on increased local production that would help mitigate unemployment. "Toyota emphasises the importance of this structured industrial policy that supports the goal of the re-industrialisation of the country. This is the cornerstone of sustained employment growth. "Furthermore, if our component manufacturers are to compete globally, they will need support and investment, which the APDP has committed to through the Automotive Investment Scheme." Mr van Zyl also encouraged foreign investors to form joint ventures with local component manufacturers to give local content the boost it needed. "Members of the National Automotive Manufacturers of SA (Naamsa) will aim to support the APDP through linked sourcing where any effort of one manufacturer to localise a component or its supplier will be supported by other Naamsa members." While local manufacturing was encouraged, Mr van Zyl said car makers were faced with over-capacity, which could be addressed by export sales growth. Andrew Kirby, Toyota vice- president of sales and marketing, said the company would export 50 000 cars this year and expected a 20% growth in the vehicle markets. "Given this figure, the market should reach a level of 475 000 units by year-end." Mr Kirby identified the sports-utility vehicle and entry-level segments as the key drivers for sales growth in the passenger vehicle market. Toyota reported a gap in the entry-level market compared to Renault and Volkswagen, but had plans to introduce such a vehicle when market conditions improve.

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BANKING

Country's Banks Better Off Than U.S. and UK
SA's banks have emerged from the global recession in a much healthier state than their UK and US counterparts. Remuneration paid to executive directors in the financial services sector increased by 7%, according to a new report issued by PricewaterhouseCoopers (PwC) July 12. While this is a much smaller increase than was seen in 2008 (23%), there has still been an increase, said Gerald Seegers, PwC South African director for human resources (tax division). By way of comparison, base salary increases awarded to executives of FTSE 100 companies over a similar period were limited to around 1%. Although there is no clear evidence that the South African financial services sector is flawed or failing, global pressure and the need for international alignment on the regulation of executive remuneration in this sector is likely to lead to changes in the structure in the future. The Reserve Bank has not yet followed other regulators in publishing regulations or codes of practice governing executive remuneration. One of the reasons for this seems to be that the South African banks have ridden the wave of economic crisis well compared with banks in other jurisdictions and have not needed bailing out by the government. The PwC report also disclosed that performance bonuses paid by large- and small-cap JSE listed companies last year had fallen. For example, the median performance bonus paid to executive directors of the large-caps fell from R2,9m to R2,4m. The small-cap bonus median fell from R1,76m to R974,000. The report also included the packages of executive directors of various sized companies, including selected sectors. The data was drawn from information publicly available at close of business April 30. For large-cap companies, the data showed yearly aggregate increases in guaranteed packages of 4% (2009), 31% (2008) and 14% (2007). The median guaranteed package (base pay and benefits) for an executive director of a large-cap company was now R3,9m. Aggregate increases in guaranteed packages for medium-cap companies reflected a steady increase of 12% (2009), 12% (2008) and 10% (2007). In this size of company, the median guaranteed package was R2,6m, with the median performance bonus at R1,5m. Mr Seegers cautioned the remuneration committee to consider shareholder and public perceptions, as well as economic conditions. "They must be sensitive in deciding how to deal with underwater share grants as well as 2010 bonuses, particularly in sectors where the recession is still being felt - and especially in an economy where the lowest paid workers have annual salaries of around R42 000. This equates to a pay gap in the order of 250-300 times."

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ELECTRICITY

Eskom, Unions in 9 Percent Wage Deal to Keep Power On
Eskom and three trade unions struck an 11th hour wage deal July 4, averting a strike at the power utility and preventing possible electricity blackouts in the final week of the World Cup. The deal, in which the government played an "informal" role, raises the bar, however, for public-sector wage increases and could put the government in a tight spot as public-sector pay negotiations are still to be concluded. The National Union of Mineworkers (NUM) and National Union of Metalworkers of SA (Numsa) said they had accepted a 9% wage increase and a R1500 monthly housing allowance and they would be able to "successfully sell the offer" to their members. The deal follows the two unions issuing strike notices to Eskom, which has a funding shortfall on its expansion programme. Consumer inflation is at 4,6%. The above-inflation increases go against a plea from Finance Minister Pravin Gordhan for the state's salary bill to be reined in this year. Mr Gordhan said in his budget speech in February that after last year it was "necessary to moderate salary increases going forward". Public-sector unions said they would discuss options after wage negotiations deadlocked last month and a dispute was declared. In May Transnet agreed to an 11% across the board hike and an additional 1% for the lowest-paid workers after a strike at the transport and logistics parastatal. Eskom initially offered workers an 8,5% wage increase and a R1000 housing allowance which the NUM, Numsa and Solidarity rejected. NUM spokesman Lesiba Seshoka said the housing allowance would be a good start for workers who had not been entitled to it before. The settlement reached at talks brokered by the CCMA was hailed as an achievement that would save SA and Eskom from embarrassment over potential power outages at the World Cup. The African National Congress described the deal as "groundbreaking, progressive and selfless". Congress of South African Trade Unions general secretary Zwelinzima Vavi said the federation would campaign for the pay gap between executives and workers to be narrowed.

Power Theft Costs Eskom and Councils R4,4 Billion
State power utility Eskom and municipalities lose up to R4,4bn a year to electricity theft and illegal connections, Energy Minister Dipuo Peters said June 30. Ms Peters said in a reply to a parliamentary question that nearly 50%, or 5850GWh of Eskom's losses in the 2008-09 financial year, appeared to be the result of theft. The thefts added to Eskom's financial burden as it was struggling to finance a multibillion- rand expansion programme to meet increasing energy demand. Ms Peters said the provision of free basic electricity had also contributed to Eskom's losses. "With Eskom and municipalities combined, and taking into account the impact of free basic electricity, the financial value amounts to R4,4bn of lost revenue due to electricity theft," she said. Mthobeli Kholisa, South African Local Government Association executive director of municipal infrastructure and services, said yesterday that municipalities faced high levels of non-payment by consumers, and electricity thefts added to their financial woes. "Some legally connected consumers also breach electricity meters, which is another area of concern," he said. "We are working closely with Eskom in formulating an anti-electricity theft programme which we hope will combat electricity theft." Eskom said that it had begun cracking down on electricity thieves, and it was working closely with the police and the National Prosecuting Authority. It had also developed technologies to combat thefts. "We have advanced technology which enables us to detect businesses and people who steal electricity, whether through illegal connections, meter tampering or other sophisticated means. We are also able to track businesses that use less electricity than considered normal," Eskom said. But Democratic Alliance energy spokesman Sejamothopo Motau said Eskom should put in place "stricter" systems and policies that would ensure that its property was not tampered with. Mr Motau accused Eskom officials of being involved in some of the thefts. "We have raised this issue with Eskom, and there should be proper monitoring," he said.

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INTERNATIONAL ECONOMIC RELATIONS

New Era Needed for SACU

President Jacob Zuma opened the first crucial Heads of State and Government Summit of the Southern African Customs Union (Sacu) with a call for a change in the way the union operates. In his opening remarks July 15, Zuma said the union had the potential to advance the economic integration agenda of the region. "We need an organisation that moves swiftly and responds in a timely fashion to the challenges that we face. We cannot afford to be complacent," Zuma said. He said the leaders had the opportunity to place the Southern African region on a growth path that will in the long-term benefit all the citizens of this area. "That is why we need to act decisively," said Zuma. Presidents from the five member states were in Pretoria in an attempt to carve a new model that will sustain and expand the union. The union is on the edge after Botswana, Swaziland and Lesotho signed an interim Economic Partnership Agreement (EPA) with the European Union while Namibia and South Africa held back. Analysts have warned that the dissolution of Sacu could have devastating economic and humanitarian consequences. Admitting that the union was facing challenges, Zuma said the summit was an opportunity for the leaders to reflect on the destiny of the union. In his concluding remarks, he said the decisions to be taken at the summit must take the organisation forward and lay the required building blocks for the future of Sacu that is developmental and which responds to the needs of people. The leaders are considering solutions to the various challenges facing the union. This includes the consolidation of Sacu through common policies and strategies; pursuit of deeper regional integration through common policy development and common institutions; and strengthening Sacu's institutional capacity. Despite these challenges Zuma, who leads the largest economy, was confident that the summit could still reposition the continents oldest union to meet ongoing economic challenges. He said the union must design and implement programmes that will ensure sustainable development in all member countries. He envisaged an organisation that is capable of advancing the promotion of cross-border trade and development, especially now that the World Cup was over it had opened investment opportunities for the continent.
"It must be able to forge new partnerships with regional, continental and global trade entities that will contribute to our development priorities," said Zuma.

Brazil Considers Lower Tariffs for Exporters
Brazil is looking at cutting import tariffs as one measure to encourage more investment from South African companies. South African companies that export to Brazil would benefit substantially if tariff rates were reduced, especially as Brazil is a gateway to other Latin American economies. Brazil committed itself at the SA-Brazil Business Forum to buy more goods in SA to end the trade imbalance by this year. This is the first step by the biggest South American economy to address its trade imbalance with SA. Figures from the South African Department of Trade and Industry show that two-way trade between the countries rose from R10bn in 2005 to R19bn last year. SA's top five product sectors for exports to Brazil were base metals (19%), mineral products (16%), machinery (9%), chemical products (5%) and plastic products (4%), Willemien Denner, a researcher at trade think-tank Tralac, said last year in a research paper. The top 10 South African products exported to Brazil represented 64% of SA's exports to that country. SA's imports from Brazil include chemicals, vehicles, machinery, ceramics, iron and steel, and Brazil charges between 10% and 12% on any goods exported to SA. Ivan Ramalho, Brazils's vice-minister of development industry and foreign trade, said July 8 that he had noted SA's business concerns about the high tariffs that had to be paid on goods and services. He told delegates at the SA-Brazil Business Forum that Brazil did not charge high tariffs compared with other countries. Brazil had increased its imports by 70% in the first quarter of this year, he said. This indicated "extraordinary growth" in its economy. Mr Ramalho urged SA to speed up the process of signing the Mercosur agreement, as this would solve the tariff barriers between the two nations. Mercosur is a regional trade agreement between South America's largest economies, Argentina, Brazil, Paraguay and Uruguay, which together have an estimated population of 242-million. The main purpose of this pact is to foster regional economic integration within this bloc. Israel is the only non-South American signatory. Trade and Industry Minister Rob Davies said that in June Parliament had ratified the Mercosur agreement. Ratification is the first step towards signing an agreement so it becomes a legal document. Mr Davies said SA would sign the agreement after the necessary consultation processes ended. SA intends to sign the Mercosur agreement through the Southern African Customs Union. "SA and Brazil have created a mechanism to monitor bilateral trade between the two countries," Mr Ramalho said. SA's second industrial policy document had been modelled on aspects of the Brazilian experience, Mr Davies told the business delegates. A bilateral agreement to deepen economic and commercial links was also concluded between the two countries, the biggest economies in their respective regions.

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Free-Trade Agreement With China Not on Cards
South Africa will not pursue a conventional free-trade agreement with China as this is not in the interests of the country, Trade and Industry Minister Rob Davies says. If it were to make a conventional free-trade agreement with China, SA would not be able to compete with that nation's economies of scale. Mr Davies said July 6 that SA was not at a developmental stage to initiate discussions on a free-trade deal with one of the fastest-growing economies in the world. "There's a structural disadvantage with our economy that we need to address" before considering a China free-trade deal, he said. China is the third-largest economy in the world after the US and Japan. It also has the largest population in the world, with about 1,3- billion people. These factors offered a huge return on investment for companies seeking to penetrate that market. SA established full diplomatic relations with China in 1998 in a calculated move to realise the potential economic benefits from that market. China forced SA to downscale its diplomatic ties with Taiwan as a condition for normal diplomatic relations with Beijing. Mr Davies was on a trade and investment promotion visit to the Chinese city of Shanghai, where SA is one of 48 African countries participating in Expo 2010 Shanghai. The huge trade fair presents an opportunity to market and profile SA as a leading investment destination on the continent. Thirty high-profile executives from SA's mining, metals and capital equipment sectors have accompanied Mr Davies on the three-day official trip. This included a delegation led by Limpopo's MEC for economic development and tourism, Pitsi Moloto. SA also intends to use the visit to Shanghai to learn more about China's mineral production beneficiation process. Ebrahim Patel, senior vice-president of the Middelburg Chamber of Commerce and Industry, said: "SA's business has a lot to learn from the manufacturing models in China. I think we should emulate the Chinese model as they are now the top trading partner with SA." Mr Patel has urged SA's trade unions to educate their members to subscribe to the ethic of a "higher- production labour force" if SA was to compete with China. Mr Davies said that the Shanghai expo would depict SA as a modern and vibrant economy. SA's pavilion at the fair has so far attracted 1-million visitors since the event began in May. The Shanghai Expo ends in October.

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MEDIA

New 'ANC-Sympathetic' Newspaper

The Gupta Group - which is closely linked to President Jacob Zuma and the African National Congress (ANC) - is funding a national daily newspaper due to go public in September. It will be called The New Age and one of the people behind it is Essop Pahad, whose magazine The Thinker is also bankrolled by the Guptas. Mr Pahad said July 5 that the newspaper "is not, and will not be, affiliated to the ANC". The newspaper is likely to add to competition for the government's lucrative recruitment advertising, which is currently dominated by the Sunday Times. When he was minister in the Presidency, Mr Pahad threatened to withdraw recruitment advertising from the Sunday Times in protest at its coverage of the government. The daily newspaper market in SA is a tough one to crack. In 2004, ThisDay folded after just a year and another, Nova, went under after five months in 2006. More recently, newspapers were hard hit by declining advertising revenue during the recession. Mr Pahad confirmed that former Business Day journalist Vuyo Mvoko, who was most recently spokesman for the Ithala Development Finance Corporation, will be editor. The Gupta group, consisting of Atul Gupta, MD of Sahara Computers, along with his brothers, Anil and Rajesh, is described as entrepreneurial and IT-focused, with a significant interest in mining. The ANC has made no secret of its dissatisfaction with the media and its belief that media companies are unfairly critical of it. At its Polokwane conference in 2007 it was agreed that an ANC-aligned newspaper was needed, but the biggest stumbling block has been to find a financier. The New Age will target the middle to top end of the market and will be based in Gauteng - it is believed at Sahara's Midrand offices. Although Mr Pahad and a spokesman from Sahara Computers denied the new newspaper would be ANC-affiliated, it is understood in media circles that it will be "sympathetic" to the party. Media analyst and the head of Journalism and Media Studies at Wits University, Anton Harber, said July 5 the newspaper would be a "healthy addition to the mix of voices" but that it was important that "they are clear and open about where they are coming from". He said there was a need to ensure that government departments did not favour the new publication when it came to recruitment advertising, which he said "would be illegal". Congress of South African Trade Unions (Cosatu) spokesman Patrick Craven also welcomed the competition, saying the labour federation had always felt that "print media were owned by too few companies".

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MINING

Aquarius Resumes Operations

Aquarius Platinum, the world's fourth-largest producer of the metal, said July 26 the suspension of mining operations at its no4 shaft at Marikana Platinum Mine, which saw the company's share price plummet, had been lifted following a safety audit July 23 by the inspectorate of mines. Mining was suspended earlier in July after an accident led to the death of five workers. The directive knocked about R4bn off the company's market capitalisation on concern the ruling would curb production and increase costs. Aquarius said July 26 the temporary closure had reduced output at the Marikana mine by about 40% for the month. It said the safety measures it would introduce had been agreed to by the government and would have little or no effect on reserve extraction percentages. The company said preliminary estimates suggested unit costs would rise about 5%. However, this was an early estimate. Aquarius said that about 4400oz of platinum group metals were produced in July - a reduction of about 40% due to the suspension ordered by the government July 7. Mining operations resumed after representations to the Department of Mineral Resources.

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Platinum Workers Set to Strike After Wage Talks Fail
The platinum industry is expected to be hit by a strike involving more than 18 000 mineworkers after wage talks at the second-biggest producer in the industry, Impala Platinum (Implats), failed July 25. Workers in a wage and employee benefit dispute may add another strike to a long list in SA this year. Analysts have argued that threats to the World Cup were used to bargain for double-digit pay hikes. The resultant pay hikes in the transport and municipal sectors have set a precedent for other workers. "It makes sense that if workers at major contributors to the economy like Eskom and Transnet got pay increases over 10%, one at a major company like Impala would demand something similar," labour analyst Tony Healy said July 26. The Commission for Conciliation, Mediation and Arbitration granted a certificate of nonresolution to the National Union of Mineworkers, which represents workers at Implats. The union was demanding a 10% wage increase across the board, plus allowances, while management was offering 8%. The union has accused Implats of refusing to break with apartheid-era labour policies, saying management refused to decrease the gap in employee benefits between black and white staff. "Before 1995, black workers were not getting any contributions. Then, in 2005, the unions and Implats agreed to change the situation, with the black workers getting a provident fund contribution of 16,5%, but now the company will not budge any further," union spokesman Lesiba Seshoka said July 26. Mr Healy said the difference might have appeared to be based on race to the unions because the rules of the fund's provisions could have been based on a grading system, with people from unskilled positions receiving lower contributions than those from more skilled positions. "Historically, the unskilled positions may have been held by people of colour. The union then has grounds for a dispute because the fund's rules need to be changed to cater for staff fairly," he said. The union was also demanding a housing allowance of R1700 a month. The chief negotiator at Implats, Eddie Majadibodu, said the company had argued the 8% wage offer for category A and B workers would cover these costs, but workers refused to accept this. Implats spokesman Bob Gilmour said the housing and provident fund claims were unfounded. They refer "to retirement funding and affect a small minority ... and we have a funding model that encourages home ownership to the lowest level".

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Anglo Offloads Australian Coal Assets for R3,76 Billion
Anglo American announced the sale of Australian coal assets worth A$580m (R3,76bn) July 5 as part of a continuing drive to shed non-core assets. The move follows two months of controversy around a proposed new mining tax in Australia but Anglo denied that this had played any part in the decision, pointing out that the proposed sale had been made public in February. "As we indicated earlier in the year, we are divesting of these undeveloped assets, which are some distance from our mining operations, as part of our optimising of our portfolio," said spokesman Pranill Ramchander. The five undeveloped assets, which have a total estimated resource of 847-million tons, include two wholly owned underground coal deposits in New South Wales, and a majority stake in three open-cut coal deposits in Queensland. The buyer is a consortium comprising Korea Electric Power Corporation; Posco, a Korean steel maker; and Cockatoo Coal, an Australian mining company. The move is in keeping with Anglo American 's strategy in recent years of divesting from noncore businesses to focus on producing iron ore and copper for the Asian market. That drive has already seen it sell shareholdings in companies including AngloGold Ashanti, Tongaat Hulett and Hulamin. The company announced in October that it would dispense with interests including its entire portfolio of zinc assets. Mr Ramchander said the company's strategy for coal projects in Australia had in no way been affected by concerns over the country's proposed new mining tax. "Our strategy for our metallurgical coal business in Australia is aligned with Anglo American's overall strategy - to focus on large-scale, long-life assets with clear expansion potential." The company would now focus on such assets and new projects including the Grosvenor metallurgical coal project in Queensland. But analysts said that the proposed levy had harmed Australia's reputation among major mining companies such as Anglo, which were likely to increase their efforts to find opportunities outside Australia. On May 5, the Australian government unveiled a plan to introduce a "supertax" of 40% on above-normal profits at mining companies. The resulting controversy helped bring about the resignation last month of prime minister Kevin Rudd. His successor, Julia Gillard, presented a revised bill that would impose a smaller levy on only coal and iron-ore projects - but it is still expected to have a significant effect on the profitability of these operations. "We've seen investment in Australia like no other country over the last 20 years, and the potential impact of the mining tax has made the companies realise that they're not diversified enough geographically," said Cadiz analyst Peter Major.

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MINERALS AND METALS

Mittal Denies Finance Chief Quit Over Ore Dispute
ArcelorMittal SA's chief financial officer, Kobus Verster, has resigned from SA's largest steel maker to join engineering and construction group Aveng - but his move was not prompted by the loss of Mittal's cheap ore supply, ArcelorMittal SA said July 23. ArcelorMittal was insistent that Mr Verster's departure was not linked to the loss of the company's single most important asset, a 21,4% stake in Kumba Iron Ore's Sishen mine from which it derived 6,25-million tons of iron ore at cost plus 3%, in one of the most favourable supply agreements in the world. ArcelorMittal categorically denied Mr Verster's departure was linked to this dispute. "As the interim pricing arrangement has been finalised, he feels comfortable that he can now accept this opportunity," a spokesman said. ArcelorMittal did not convert its stake in the mine to a new-order mining right. Kumba took the opportunity to say the favourable supply agreement was linked to the right and now that ArcelorMittal did not have it any more, Kumba could begin charging the steel maker commercial prices. ArcelorMittal disagrees with Kumba's interpretation of events and the matter is going to arbitration, a process Kumba CEO Chris Griffith said could take one to two years to resolve. After five months of talks to settle an interim pricing agreement deadlocked, the government stepped in and the parties agreed a deal whereby ArcelorMittal would pay 40 a ton more for Sishen ore than the 30 it had been paying. There has been speculation among analysts that heads will roll at Mittal for the loss of the stake in the mine and the subsequent cancellation of the supply agreement. Mr Verster will join the Aveng board as an executive director from September 1 and become financial director from September 27. He leaves Mittal on August 23 after 20 years with the company. The interim pricing agreement means Mittal will pay 50 a ton of ore for its export-focused Saldanha mill and 70 a ton for ore bound for its two inland mills, up to the end of July next year . Mittal pays freight costs on ore deliveries. The concern within Mittal is that its profit margins are going to shrink. The outlook for Mittal in SA is one of higher input costs. If the arbitration hearing goes against it, Kumba is going to press for prices more closely related to global prices, which are about 115 a ton. Also, a second Kumba mine, Thabazimbi, which supplies about 2-million tons of ore a year to Mittal, is predicted to close by 2016. Kumba is looking at bringing its Phoenix project at Thabazimbi on line then, with production of 3,4-million tons, to sell at commercial prices.

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RETAIL

Retail Sales in May Exceed Forecasts

Retail sales accelerated at the fastest pace in more than two years in May, above expectations and boosting hopes of a stronger recovery in consumer spending, the economy's main engine. But analysts said it was too soon to make upbeat assumptions, given heavy debt overhangs for households, employment worries and looming price hikes for water, electricity, education and health. Retail sales grew 4,6% in May compared with the same month last year, well above consensus forecasts for an increase of 3,6%, official data showed yesterday. But Statistics SA revised the April increase down to 2,9% from 3,2%, and the boost to sales was seen as likely to stem in part from a spike in demand ahead of the World Cup. "The data we've been gathering ... suggests that the picture is still one of broad weakness, even though consumption is on a recovery path," said Standard Chartered economist Razia Khan. "The strong pickup in retail activity in May was, at least partially, driven by the World Cup," said Stanlib economist Kevin Lings. This implied that sales for last month (June) and this month (July) would also be fairly robust, while activity in October and November would appear to "go soft", he said. Retail sales account for about 12% of the economy's output and is the second-biggest employer, providing 22% of the jobs in the formal non-farm sector. "While retail confidence remains broadly upbeat, future concerns stem from the still bleak outlook for the financial position of consumers in 12 months' time," said Standard Bank analyst Shireen Darmalingam. "This does not bode well for a sustained retail sales recovery." In the US, retail sales fell 0,5% in June, below forecasts and showing that they are still struggling to gain traction after last year's recession. Retail activity would be the "mainstay" of SA's recovery later this year, taking over from inventory replenishment in the manufacturing sector, Thebe economist Monale Ratsoma said. Retailers recorded five months in a row of "real positive growth" after contracting at an average 5% last year, he said. Wholesale sales fell 0,2% in May compared with April, other figures from Stats SA showed yesterday. Compared with the same month last year, sales rose 3,1%, in prices adjusted for inflation. The volatile measure was showing signs of stability, Citigroup economist Jean-Francois Mercier said in a research note. Growth in retail sales of household and furniture remained robust, rising 17,7% year on year after a 19,9% increase in April. Sales of textiles, clothing and footwear quickened to 7,5% year on year, after a 6,7% increase the previous month. Another encouraging sign came from sales of hardware, paint and glass, which rose 1,5% compared with May last year. Overall private-sector credit extension rose 0,8% in May versus the same month last year, above forecasts and following a fall of 0,9% in April. Households drove the rise with credit up 3,8% year on year - the same pace as April - but borrowing by companies fell 1,5%, moderating from a 5,1% fall the previous month.

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TELECOMMUNICATIONS

Telkom Pays U.S.$80 Million to Settle Nine-Year Legal Wrangle

Telkom said July 15 that it had paid $80m to a former supplier in the US, ending a nine-year legal wrangle over the abrupt termination of a software contract. The settlement followed a private arbitration process through a British counsel, said Anton Klopper, Telkom's group executive for legal services. "The arbitrator awarded a capital amount of approximately 30m in favour of Telcordia (excluding interest)." The final payment of $80m included interest and legal costs. Telkom had set aside only $77m to cover the liability, but Mr Klopper said covering the shortfall would not affect operations. The company "has the resources to fund the $3m in the normal course of business", he said. Mr Klopper said there was nothing extraordinary about the length of time taken to resolve the dispute. "The matter was a very complex one in which the arbitrator was assisted by a software expert. It is not unusual for matters of this nature to run for a number of years." Telkom cancelled an order from Telcordia Technologies for communications software in 2001, two years after striking a deal with the US company. The utility said at the time that it was "not satisfied with the services and products supplied by Telcordia in the sense that these did not meet Telkom's business requirements". However, Telcordia said the contract had been broken illegally and instituted a damages claim against Telkom. The US company sought $130m in damages from Telkom, which responded by launching a counter-claim worth nearly three times that amount. In 2002 the International Chamber of Commerce ruled in favour of Telcordia's parent company, Science Applications International, but that was not the end of the legal battle. The following year, the Pretoria High Court set aside the chamber's ruling, and Telcordia's application for leave to appeal was dismissed by the same court the following year. But Telkom's position was undermined in 2006 when the Supreme Court of Appeal upheld an appeal by Telcordia, finding that the high court had gone beyond its mandate by reinterpreting the 1999 contract. After that decision was upheld by the Constitutional Court in February 2007, the companies proceeded to arbitration to determine the level of compensation. The $80m settlement represents a significant discount on the $300m, including interest, that Telcordia was demanding as early as 2007. Yet Telkom could reportedly have concluded the dispute far more cheaply in 2006, after Telcordia offered to accept a $30m payment weeks before the Supreme Court of Appeal's ruling in its favour.

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TRANSPORT

Gautrain Passenger Numbers 'Shatter Forecasts'

In its first month of operations Gautrain transported more than 400 000 passengers between Sandton and OR Tambo International, shattering all forecasts ahead of the rapid rail link's official opening. "Ahead of the launch we were expecting a third of that number and we are extremely pleased with the usage so far," Jerome Govender, CEO of the Bombela Concession Company, which operates the train, said July 13. "Demand was such that on our first weekend of operation we had to increase the frequency of the trains from 30 minutes to 12 minutes to meet the demand. We were carrying about 20 000 passengers on weekends during June." Mr Govender said the decision to increase frequencies on weekends was also to address a safety concern about crowded platforms. However, Mr Govender admitted that the first month's numbers were buoyed by the World Cup, the lengthy school holidays and many passengers eager to experience the train for the first time. "With the World Cup behind us, we have returned to 'normal' trading conditions and I expect to see passenger numbers fall somewhat in the next month," said Mr Govender. He also expected crowds to shrink around ticketing outlets as people became familiar with the Gautrain. "This problem will also be addressed when we open all 10 stations next year and passengers will use their station of departure to acquire their Gautrain cards." Mr Govender said that while Bombela was considering some changes to the service in response to demand and feedback from passengers, it would wait for the volumes to settle in the next three months. "The next few months will give us a clear indication of the volumes we can expect into the future." Some of the changes include extending the operating hours of Gautrain's airport link. "The feedback we were getting from passengers was that they needed earlier opening times in order to catch early mornings flights. "But before we make those changes we need to ensure we have the volume of passengers to sustain the longer operating times." Addressing the feeder bus system, Mr Govender admitted the service was not receiving strong support from commuters. "They are not performing as we would like but, having said that, we did transport 24 000 people in the first month. "We never expected fireworks during the first phase and the system will only really come into its own when the full Gautrain network is up and running. " Looking forward to the opening of phase two between Park Station in Johannesburg to Pretoria in March, Mr Govender said Bombela was debating whether to open new stations as they were completed.

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UNEMPLOYMENT

South Africa Has 'Lowest Employment Rate'

SA's adult employment rate is less than that of every other African economy, according to economist Mike Schüssler's 2010 Employment Report, presented in conjunction with the United Association of SA labour union in Johannesburg July 1. This was despite SA being considered a much wealthier country with a more advanced economy. The employment ratio of adults in SA was only 41,4% compared with a ratio of 83% in Uganda, 80% in Rwanda and 78% in Tanzania and Malawi. The report showed employment growth in SA's formal, non agricultural sector had added 2% to employment numbers in the past decade, while overall employment had grown only 4,5%. However, the number of people choosing not to participate in the economy grew by almost 25%, while the population in the decade from September 2000 to March this year grew by 12,7% and the formally unemployed by 3,6%. Mr Schüssler said employment policies and laws had to change before cultural shifts occurred in the mind-sets of people who had given up on job-seeking. "The employment situation is overwhelmingly desperate, " Mr Schussler said. He said a major cause of SA's poor employment rate could be that more South Africans received money from welfare than from employment. Mr Schüssler said 12,8-million people had been working, and not always for money, while 13,8-million people had received welfare payments from the proceeds of only 5-million taxpayers. However, Econometrix economist Tony Twine said the reason for SA's poor showing relative to other African countries may lie in the nature of its economy. "SA's economy is so much more sophisticated than any other economy in Africa and alongside that sophistication, SA has unskilled people. "In other African countries, it is much easier to employ people to do one job, because of their lack of sophisticated equipment, for example," Mr Twine said.

 

 

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