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SOUTH AFRICA


  
  

 

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

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Update No: 099 - (01/12/10)

WIKILEAKS and SOUTH AFRICA
Former South African president Nelson Mandela was not spared in the swathe of revelations emerging from the Wikileaks website, where thousands of US diplomatic cables have been released. These would reveal the depth of Mandela's opposition to the war in Iraq. Mandela considered then US president George W Bush was incapable of thinking correctly and believed that Bush ignored calls by the United Nations for restraint in Iraq because the UN's then secretary general, Kofi Annan, was black. Other cables still to be released, meanwhile, would also show South Africa's first black president, as being on the receiving end of criticism. The US embassy in Pretoria admitted it had approached the South African government to warn it in advance about the messages. The cables also contain embarrassing revelations about how both South Africa and the US view Zimbabwe's leaders. "The crazy old man," is how South Africa's International Relations Minister Maite Nkoane Mashabane is said to refer to Zimbabwean President Robert Mugabe - a remark that was likely to cause a stir in Harare given that South Africa is overseeing the implementation of Zimbabwe's power-sharing agreement. The cables also expose Washington's doubts about the leadership of Zimbabwean Prime Minister Morgan Tsvangirai. While the man who has led democratic opposition to Mugabe for the past decade was "the indispensable element for opposition success" he risked becoming "possibly an albatross around their necks once in power," the then US ambassador to Zimbabwe wrote in 2007.

President Jacob Zuma says he has helped to smooth tensions between Zimbabwe's rival leaders, during a visit to Harare November 26. Mr Zuma said the row between President Robert Mugabe and Prime Minister Morgan Tsvangirai had been resolved, after four hours of discussions. But analysts warn that these talks may not bring about any immediate results. The dispute is the latest sign of worsening relations between the long-time rivals. "They've agreed that there was a breakdown of communication amongst them, and we have resolved that, and so they have agreed to continue meeting," President Zuma said. Mr Zuma, Mr Mugabe and Mr Tsvangirai appeared relaxed at a news conference afterwards, smiling and shaking hands. The South African leader arrived a day after Mr Tsvangirai took Mr Mugabe to court over the appointment of regional governors. Mr Tsvangirai says he should have been consulted over the appointments under the power-sharing deal which saw him become prime minister. Both leaders have been increasingly critical and outspoken about the failures of the power-sharing agreement - with both calling for an early election. In October Mr Mugabe said that the coalition deal should not be renewed when it expires in February.

The government plan to create five million jobs through its new growth path framework for South Africa will be difficult to achieve, the SA Chamber of Commerce and Industry (Sacci) said November 24. "Sacci believes that it will be difficult to achieve the target of creating five million jobs within five years even though the sectors identified for specific attention are those that have the potential to contribute significantly to its attainment," said Sacci president Chose Choeu in a statement. Economic Development Minister Ebrahim Patel unveiled government's New Growth Path economic strategy November 23, which aimed to create five million jobs over the next decade. Choeu said to achieve this, the government would have to implement policies and incentives to grow the small, medium and micro-enterprise (SMME) sector. It would also have to cut the red tape that hindered small business development. "It will also be very important that the commitments and milestones identified in the growth path are adhered to, a task that will have to be undertaken by the monitoring and evaluation unit in the presidency." The New Growth Path set targets for scarce and key skills including the aim to produce 30,000 more engineers by 2014, and 50,000 more artisans by 2015.

The worst of the recession is over with real growth in the country's Gross Domestic Product (GDP) expected to come in at 3 percent this year, after reaching 3.9 percent in the first half of the year. Presenting his Medium Term Budget Policy Statement October 27, Finance Minister Pravin Gordhan cautioned however that with an ever-changing world there was a need to remain vigilant. Driven by an increase in household demand and lower inflation, GDP growth is expected to rise to 3.5 percent next year and hit 4.4 percent in 2013. Gordhan said Africa was set to become the second fastest region after Asia and added that the recovery of global demand, which is being driven by emerging economies, had helped South Africa to secure high prices for its major commodities. While China, Brazil and India, are expected to grow by an estimated 7.1 percent this year and 6.4 percent next year, the US and EU are set to only experience 2.6 percent and 1.7 percent respectively, in GDP growth this year.

Unemployment edged up to 25,3% in the third quarter of this year, figures released October 26 showed, highlighting the magnitude of the challenge facing the government's new plan to cut the jobless rate to 15% by 2020. South Africa's official unemployment rate rose from a revised 25,2% in the second quarter, well above 24,4% in the third quarter of last year, Statistics SA said in its Quarterly Labour Force Survey. When those who have given up looking for work are taken into account, the jobless rate rose to an alarming 36,6% from 35,8% in the second quarter. Employment fell by 86 000 during the period, leaving 4,4-million people jobless - despite the economy having grown for four quarters in a row. "The economy is not really creating any jobs. Job creation is virtually at a standstill," the deputy director-general at Statistics SA, Kefiloe Masiteng, said. The news coincided with a new growth plan announced by the government October 26, which aims to create jobs through expanding infrastructure. It will also tap employment potential in agriculture, mining, manufacturing, tourism and the "green" economy.

South Africa's retail sales rose by 6.1 percent year-on-year in September - a much better than expected outcome predicted by experts in the financial sector. "This is suggesting that consumption continues to recover, despite a challenging job market and relatively high debt burdens," said Nedbank, in reaction to the figures. The bank said sales were likely to remain firm in the last quarter of the year, helped by attractive prices and low interest rates. Statistics South Africa said November 17 the 6.1 percent was an improvement from August's 4.6 percent. Retail sales have grown by 6.2 percent in the three months to September, compared with the same period a year ago. Retail sales growth has been positive since January 2010. "While the consumption side of the economy is recovering, the production side is still struggling. As a result, and given the subdued inflation outlook, the Reserve Bank's MPC [Monetary Policy Committee] took the opportunity to stimulate the economy further and help take some of the edge off the strong rand by cutting interest rates by another 50 basis points October 18.

Controversial Newspaper May Launch in December
South Africa’s pro-government newspaper, The New Age, is finally set to be published on December 6, after several false starts. The paper was originally set to launch in September but was postponed to the beginning of October. It was then delayed again when five senior editors, including the editor-in-chief, walked out before the launch. The purpose of the controversial newspaper is to act as a tame propaganda organ of the ANC purporting to be an independent national newspaper. The quid pro quo is that it will it will be rewarded with advertising from various government departments. Taken together with the proposed Statutory Media Appeals committee, it is a not very subtle grab at press freedom which the monolithic ANC finds an irritation -a free press after all being incompatible with one party political domination.

The majority of the paper is owned by the controversial Gupta family, which is closely aligned with President Jacob Zuma and his son. The October 20 launch of the pro-government newspaper was postponed when the editor and four senior staff quit hours before the first issue was due to go to press. The New Age has promised "more positive" news and to highlight the achievements of the governing African National Congress (ANC). Its owner, the Gupta Group, has close links with President Jacob Zuma and his family. The paper was due to hit the streets October 20, but at 3pm there was a staff mutiny involving the editor, Vuyo Mvoko, the deputy editor Karima Brown and three other senior staff. Gary Naidoo, managing editor of the New Age, told South Africa's Talk Radio 702: "We were ready to go to print. We withheld that publication with respect for those editorial staff that have stayed on. "We have been prepared and we have been working throughout the weekend. We have been working right up to Monday. We did not anticipate this." The five journalists who walked out issued a joint statement that said: "We have taken the decision that it would be neither proper nor professionally acceptable for us to speak publicly about the reasons for our decision." There were reports in the South African media that the incident followed a disagreement with the owners over the paper's editorial stance. Mvoko was understood to have resigned because he felt his authority was being undermined. The New Age's owners are Indian businessmen who arrived in South Africa in 1993 and built their fortune from computers. Concerns have been raised about the Guptas' nine-year relationship with Zuma and his family. Atul Gupta is said to be a close friend of Zuma; Gupta's brother, Rajesh, and Zuma's son, Duduzane, are business partners who own shares in the steel company ArcelorMittal. The walkout by staff came on national press freedom day in South Africa, an event marked by protests and debates because of two new measures being considered by the ANC. The party is pushing for the creation of a statutory media appeals tribunal and new laws that would broaden the definition of official secrets, with whistleblowers and journalists who infringe them facing up to 25 years in prison. The ANC says legislation is needed to make journalists legally accountable for inaccurate reporting. But there has been an outcry from journalists and figures such as Desmond Tutu and the writers André Brink and Nadine Gordimer. Many say the laws are reminiscent of the apartheid era and would be abused to cover up government corruption. Hundreds of demonstrators marched to Constitution Hill in Johannesburg in a silent protest October 19. Kader Asmal, a former cabinet minister, told a meeting at Wits University: "Who can fight the persistent calls to respect freedom of the press from Nelson Mandela? "We have managed through our sacrifice of blood, sweat and tears to secure a precious new dispensation that rightly placed freedom of speech and access to information as lodestars of a new order. We cannot and must not allow any denigration of these core beliefs that were so dearly won."

NPA Confident Selebi Conviction Will Hold
The National Prosecuting Authority was confident November 16 that the conviction of former national police commissioner Jackie Selebi would be confirmed in the Supreme Court of Appeal. The Supreme Court of Appeal (SCA) partly granted an application for leave to appeal by Selebi to the Bloemfontein court. NPA spokesman Mthunzi Mhaga said the prosecuting team would argue against the appeal. "We are confident the conviction would be confirmed even on the grounds to which leave to appeal were granted." Mhaga said the NPA was relieved that the court had not interfered with Selebi's sentence. "We feel it was appropriate under the circumstances." Selebi was convicted in the High Court in Johannesburg of corruption in July 2010 and sentenced to 15 years imprisonment in August this year. Trial judge Meyer Joffe found Selebi guilty of accepting money from drug trafficker Glenn Agliotti. Selebi appealed the high court judgment but the trial court granted him leave to appeal against his conviction only, however, limiting the appeal to one issue only - namely "whether the State proved beyond reasonable doubt that the accused received the payments, which were found to have been made to him". Approaching the SCA, Selebi wanted the SCA to extend his appeal to include further grounds. Selebi submitted that the trial court was wrong in finding that the State had proved that he provided Agliotti with any "quid pro quo" (benefits as found by the trial court) as a result of gratification received from Agliotti. The former police commissioner also wanted the SCA to look at the high court's finding that he received a fair trial, in view of his argument of the investigating and prosecuting teams' improper conduct against him. Selebi also wanted the SCA to look at two other aspects of the high court's findings against him. However, the SCA granted Selebi leave to appeal against his conviction on the further ground of "quid pro quo" thus extending the SCA appeal to include both the factual findings of the trial court - Selebi had received certain payments and gifts and he had given certain benefits in return. The Bloemfontein court refused leave to appeal against the other grounds forwarded by Selebi. Leave to appeal against sentence was also refused. A SCA official said it was expected that the appeal would be heard during the third term of the SCA in 2011.

Much to Prove at United Nations Security Council
In January 2011, South Africa will be back in the United Nations Security Council. Is it likely to do any better than the last time round? To be fair, the South African government's prior performance in the council was underrated. After all, it was incredibly energetic. It put African issues squarely on the UN agenda. It played a central role in the push for UN reform. And in most decisions, South Africa was with the diplomatic mainstream. Yet all it has been remembered for is its defence of "rogue powers'" and its refusal to support resolutions imposing sanctions on Iran, Myanmar, Sudan, and Zimbabwe. Many in the human rights community and in the US and European diplomatic communities saw these decisions as a betrayal of the spirit of South Africa's own democratic transition and the international support that had facilitated it. Their criticisms defined the general perception of South Africa's performance. Can South Africa avoid this fate this time around? After all, almost all of the same problems - Sudan, Zimbabwe, Myanmar, Israel/Palestine, Afghanistan, Iraq, and Iran - remain on the council's agenda. Some of the problems have become even more complicated. Somalia's pirates are ever more brazen and the country's official government is on the verge of collapse. Sudan goes to a referendum in early January 2011 and is likely to decide in favour of secession. If anything, the political issues are going to be even more controversial, and with an Obama administration in the White House, it is no longer going to be possible to play the right-wing card against the US. What does South Africa need to do to avoid the mistakes and reputational risks of the past? According to Siphamandla Zondi, political analyst and executive director at the Institute of Global Dialogue, it needs to beef up its communication strategy and capacity in Pretoria and New York. For Zondi, the essential problem is one of technical skills. If only it had had the right people to communicate the political message and explain the rationale of South Africa's decision making, the problem and the criticisms would have been avoided. While there is an element of truth in the fact that South Africa could benefit from beefing up its communication capacities, Zondi overly simplifies matters. Communication was definitely a problem but it was not the only one. An even bigger problem was South Africa's strategic orientation on these issues. Clearly South Africa wanted to avoid becoming a pawn in big power machinations. It had a case when it suggested that the countries that were singled out for action by the Security Council were only those that were not allies of either the US or Europe. But in its desire to avoid becoming a pawn of the US and Europe, and in merely voting against the resolutions tabled by them, it unwittingly became the implicit defender of autocrats and dictators. To avoid this scenario, South Africa would need to develop an alternative strategic orientation. Such an orientation would need to be defined by two distinct features. First, mere critique of the positions of big powers is not going to be good enough. The country would need to be more proactive, and provide leadership in this regard. In cases like Myanmar, this would require South Africa to demonstrate the political will required for leading the charge against Myanmar's generals, even if it does this in the UN's Human Rights Committee. In cases like the Congo, Somalia, Sudan and Zimbabwe, it would need to recast the terms of any intervention and engagement. It may be possible to use a typical African formula for finding a solution to the continent's intractable problems. This notion looks to precedents in South Africa and Mozambique where intractable problems were addressed through negotiated solutions in which losers in the democratic transition were neither victimised nor subjected to legal sanctions. This holds promise for resolving political conflicts in African contexts such as Somalia, Sudan and Zimbabwe. The South African case holds the lesson that justice may be tempered if peace is to be the dividend. After all, many of apartheid's generals and political leaders today sit on their farms even though they perpetrated both murder and human rights abuses, not only in the country but in the region. But the tempering of justice cannot occur without the explicit quid pro quo being the suspension of violence and the establishment of peace. There is a potential ally that South Africa has not mobilised until now to marshal support for its strategic orientation. This is the international human rights community. It is surprising that diplomats associated with the international anti-apartheid struggle have so easily forgotten the benefits of linking struggles and allies on the streets with those in the corridors of diplomatic power. Instead, our officials in the Department of International Relations assume that diplomacy and foreign policy need only involve conversations and activities in closed UN and government circuits. This is a hopelessly old-fashioned approach and is out of step with contemporary political realities. Moreover, it is short-sighted, for, by not mobilising the international human rights community, the South African government leaves this terrain open for those hostile to its agenda and interests. This is perhaps the central lesson to be learnt from South Africa's prior tenure on the Security Council. If South Africa is to have a more successful tenure this time , three things need to happen. First, it needs to fashion a new strategic orientation that speaks to the realities on the ground yet advances the agenda for the cession of violent conflict and the establishment of peace. Second, it needs to marshal support for its strategic orientation both among diplomatic allies such as Brazil and India, and among progressives within the human rights community who are critical of great power machinations and who are open to engaging in solidarity actions in favour of oppressed communities. Finally, the Department of International Relations needs to deploy sufficient financial, diplomatic and human resources, including skilled communication practitioners, to the UN. If it fails to do any of this, South Africa runs the risk of repeating the mistakes of its prior tenure on the Security Council. If this were to happen again, it could irreparably damage the reputation of South Africa, and undermine international support for its bid to become a permanent member of the council.

ANC Veteran Pallo Jordan Opposes Media Tribunal
ANC veteran Pallo Jordan criticised his party's media tribunal plans at a debate where he was originally scheduled to speak in favour of the tribunal and the controversial Protection of Information Bill. "How did it [the ANC] paint itself into a corner where it can be portrayed as being opposed to media freedom? All the legislation we now have, including the Protection of Access to Information Act, was developed by the ANC," said Jordan, according to a report in Business Day newspaper November 23. "Given all these measures, how does one square that with an attempt to control, or pressure, media into a corner? I say it's a fool's errand, it cannot be done, given the commercial, technical environment that presently exists in media." He was speaking at a National Association of Democratic Lawyers panel discussion, where he was scheduled to speak in favour of the bill and tribunal. But when Jordan started talking, he said the audience might be confused by the remarks he was planning to make. He went on to say the ANC was creating a "lose-lose situation" for itself. Jordan warned that not only was a constitutional challenge against the bill possible, but also, that it was very difficult to keep information secret today. "Think about WikiLeaks and documents on the Nato coalition's activities in Afghanistan or Iraq. "Given the policies we [the ANC] have in place and the laws we have in place, if the movement pursues this path it can only result in a lose-lose situation. "Those who want to rubbish us will have every right to do so," said Jordan. The ANC refused to comment on his remarks. "If there is anything inappropriate I will comment to him, not to the media," party spokesman Jackson Mthembu said. The ANC would examine media regulation models from around the world before Parliament deliberated on the matter of a media appeals tribunal, as resolved at the party's national general council. Dene Smuts of the Democratic Alliance welcomed the fact that Jordan "has given up on chanting the tired old mantra that the ANC gave us free speech and the access to information that forms part of the freedom of expression". "We are all sick and tired of ANC grandstanding when the real motivation behind the latest proposal for a media tribunal is to be found perfectly frankly stated in the ANC's own discussion document... the real problem is leaks from within the ANC to the media." Secrecy had spread "like an oil slick" since the ANC took over, she said. The Protection of Information Bill met with an outcry over the sweeping powers it would give to the state to classify information and the harsh penalties imposed on journalists who published state secrets. It is being processed by an ad-hoc parliamentary committee. In response to wide-spread criticism, the ruling party agreed to remove the nebulous notion of "national interest" as clause for classification, but the debate about how to balance the need for classification with media freedom continues.

Special Dispensation to Zimbabweans Won't Be Extended
The South African government will not move its special dispensation deadline for Zimbabweans to regularise their stay in the country, which is set for December 31. Shortly after her meeting with representatives of different Zimbabwean organisations November 23, Home Affairs Minister Nkosazana Dlamini Zuma said the deadline will not change. "We've met the Zimbabwean stakeholders to get their perspective on challenges creating problems for them ... so that we can resolve them. "At this stage, we want to be clear that there is no plan to move the deadline. The current deadline for December 31 is still firm," she said. Another meeting is planned for the second week of December to finalise all outstanding challenges. However, Dlamini Zuma said those who are on the department's database before the deadline will be assisted to regularise their stay in the country. "Here we are referring to those who will still be waiting for proper documentation from their home country and approach us before the deadline. Anyone who fails to report or apply to be regularised will not be considered," she said. Some challenges have sprung up with regards to those who surrendered their fraudulently acquired documentation and have since received amnesty. "[Some of these] people have bought properties, registered businesses and their children's birth certificates with these fraudulent documents," said the minister. Dlamini Zuma said more than 70,000 people have since come forward to get their documentation, while less than 2,000 have surrendered their fraudulent documents. The Zimbabwean government is said to have produced over 30, 000 passports so far for its citizens living in South Africa. Robert Mugabe's government has agreed to open an office at Beitbridge bordercrossing in Musina to fast track the process. After Zimbabwe, Dlamini Zuma said the process would be extended to other citizens from neighbouring countries living in South Africa.

South Africa Urged to Stop Protecting Mugabe
South Africa has been urged to stop protecting Robert Mugabe by ensuring that upcoming elections in Zimbabwe are free, fair and non-violent. The Zimbabwe chapter of the Southern African Commercial Farmers Alliance (SACFA) said in an open letter to South Africa's ambassador to Zimbabwe, that the South African government "appears to go out of their way to prop up the (Mugabe) administration in Zimbabwe." "We know of no dictator who has relinquished his position voluntarily and without pressure. Hitler needed the combined military forces of the free world to remove him: the people of South Africa through their concerted actions convinced F W de Klerk of his untenable position. There are numerous other examples," the letter reads. It continues: "As far as Rhodesia was concerned, South Africa was vital in paving the way for majority rule and they still hold the key to proper governance in this country thirty plus years later." The letter details how the former Thabo Mbeki administration has covered up the true state of affairs in Zimbabwe, by not making public a report on 2002 elections, deemed 'free and fair' by South Africa. The letter says that South Africa "actively participates in what appears to be a devious scheme hatched by the Justice Ministry in Harare to preclude the Southern African Development Community (SADC) Tribunal from delivering any further rulings which are deeply critical of Zimbabwe government actions." The regional Tribunal was suspended by SADC leaders this year, in what critics said was an effort to appease Mugabe. The Tribunal ruled in 2008 that Mugabe's land grab campaign was unlawful, and the court ordered the regime to compensate farmers for stolen land and protect farms from further illegal land seizure. But despite the government completely ignoring the Tribunal's orders, SADC leaders, including South Africa, have instead moved to 'review' the role and mandate of the human rights court, effectively shutting it down. "Blindly they allow themselves to be swayed by the blandishments and rhetoric of a cunning and crafty regime in Harare which has gained notoriety for abusing any means, reneging on any promises, to prolong its stay in office," SACFA Chairman Chris Jarrett said in the letter. Jarrett also wrote that the persistent refusal by both governments to honour Bilateral Investment Protection and Promotion Agreements (BIPPA), should be "an embarrassment" to South Africa. A number of South African owned farms in Zimbabwe have been violently seized by Mugabe loyalists in recent months, despite the BIPPA signed by both governments. The South African government however has made no comment about these illegal actions and has taken no action against Zimbabwe for clearly violating this pact. "It is obviously in South Africa's enlightened self interest that they stop the rot in Zimbabwe from progressing any further," Jarrett wrote adding: "We are not suggesting that your country sends in troops to force this regime to relinquish power; the pressure we ask your government to exert is much simpler than that." SACFA urged the South African authorities, "to use its unique position to ensure two things: that SADC send roving observers backed by fearless reporters at least six months before polling date to ensure that there is no violence and fair play is seen to be the order of the day." The group also urged the South Africans "to make it abundantly clear that if the election is not contested according to the standards set by SADC, then SADC and the AU will not recognise the result." Jarrett told SW Radio Africa November 19 that South Africa is the only country in the region that wields the power to force the Mugabe regime to abide by its promises, as outlined in the Global Political Agreement (GPA). "We are just asking them to abide by the basic principles that govern the region, govern bilateral agreements, cover any respected government in the world," Jarrett said. "It is their responsibility to ensure the next elections reflect these principles and are free and fair."

Reshuffle Raises Expectations for Zuma Administration
President Jacob Zuma's Cabinet reshuffle October 31 will raise expectations for the performance of government business, experts said November 1. President Zuma announced a Cabinet reshuffle in which seven ministers were replaced and several new ministers and deputy ministers were introduced. "The message could be interpreted as a decisive one in response to protracted progress toward government objectives given the small progress made," South African Chamber of Commerce and Industry (SACCI) CEO Neren Rau said. Rau added that the reshuffle was a "fairly positive thing" and the decision placed "huge pressure on the new Cabinet because they have a shorter period to produce results. "They have a shorter period to prove themselves. They have about three years to prove themselves. With this [reshuffle] you raise expectation," explained Rau. The former ministers had filled their posts for 17 months. However, SACCI expressed concern at the expanded Cabinet given the challenges faced by the country, adding that there should have been an emphasis on improving the current structure. "The chamber is of the view that there should be a stronger focus on driving greater efficiencies within the public administration. The chamber is of the view that more effective delivery outcomes can be coaxed, not through the deployment of more resources, but through more effective use of current resources," it said. President Zuma left the economic portfolios as is - a move which the chamber said bode well for the country. "For markets you want to keep officials that are known to the markets, people that they trust and are used to. The Minister for Finance (Pravin Gordhan) I would say is well respected in this regard," said Rau. On what the new administration should focus on, Rau said: "Given the short time in which they have to deliver they should pick one or two issues in line of administration and deliver on that." The National Union of Metalworkers of South Africa (Numsa) has welcomed what it calls the resolute and decisive action on the part of President Jacob Zuma on his decision to reshuffle his Cabinet. It said Zuma had demonstrated that undeserving and under-performing officials in government will not be tolerated. Numsa in particular welcomed the pairing of the Minister and Deputy Minister of Economic Development who both come from the manufacturing sector and should drive a dedicated programme in relation to the New Economic Growth Path. Enoch Godongwana was appointed as Deputy Minister of Economic Development in the reshuffle. Trade union federation COSATU has meanwhile wished the new ministers and deputy ministers well as they tackle the immense challenges South Africa faces. "We urge the new team to remain fully united so that we can move forward together to deliver on our promises and bring down the unacceptable levels of unemployment, poverty and inequality," said Patrick Craven, Cosatu spokesperson, in a statement. The Communication Workers Union (CWU) also added its support to the Cabinet reshuffle, especially the appointments of the new Minister of Communications Radhakrishna "Roy" Padayachie and Deputy Minister Obed Bapela. "We hope that these ministries will be decisive in this communications sector. This is the sector that needs more attention as it is beset by crises," it said in a statement, adding that it saw the reshuffle as necessary to speed up service delivery and the needs of the poor and the working people of this country.

Country Tops Emerging Markets in Corporate Governance Report
South Africa has received the top global ranking for its corporate governance disclosure requirements out of 24 emerging markets, says a report by the International Standards of Accounting and Reporting. This could largely be attributed to SA's corporate governance doyen Mervyn King, said experts October 26. He "has been at the forefront of the corporate governance project in SA, which has enjoyed worldwide recognition both with the United Nations (UN) and the World Economic Forum," said Michael Katz, chairman of corporate law advisers Edward Nathan Sonnenbergs. The ranking "will provide foreign investors who deal with South African companies with much comfort in that it shows we are attentive to our corporate governance principles", said Mr Katz. The International Standards of Accounting and Reporting is a working group of experts at the UN Committee on Trade and Development. The study looked at the corporate governance disclosure requirements of regulators and stock exchanges in 24 emerging markets, including Brazil, Chile, China, India and SA. It studied laws and regulatory instruments, including the listing requirements of stock exchanges. Leonard Brehm, national chairman of Grant Thornton, said Mr King has put SA on the world map in terms of corporate governance. The ranking follows the recent number one spot accorded to SA by the World Economic Forum for its auditing and reporting standards. These reports were certain to instil confidence locally and from a foreign perspective, Mr Brehm said. Mr King said the ranking would be to the benefit of South African businesses and foreign investors.

Business, Labour Welcome New Growth Path
Labour and business have welcomed the release of South Africa's new growth path while also identifying areas that require immediate action. South Africa has set itself a target of creating five million jobs and reducing unemployment from 25 to 15 percent in the next decade. November 25, Rural Development minister Gugile Nkwinti, Finance Deputy Minister Nhlanhla Nene and Deputy Minister of Economic Development Enoch Godongwana were part of a government delegation that met with labour and business to discuss the new growth path. Economic Development Minister Ebrahim Patel revealed the framework for the New Economic Growth Path, which is intended to help South Africa achieve its national development goals. The path will look to the green economy, agriculture, mining, manufacturing and tourism industries for most of the employment opportunities while also calling for commitment from government's social partners such as ensuring moderate wage increases. "All Constituencies welcome the opportunity to engage with government proposals on the New Growth Path," said government, labour and business. The parties agreed that long term sustainable job creation requires a strong focus on opportunities on the African continent of which closer economic integration is needed. The green economy, skills development, infrastructure development and improving the rate of domestic savings were some of the areas identified for immediate focus in the need to create jobs. The strengthening of basic education was also highlighted at the meeting. "A key role will be played by teachers, parents and government as well as students. This campaign can be launched early in the new year." Bilateral discussions will be held in December while formal talks will continue next year to discuss the proposals contained in the framework document.

IBSA Unites for Job Creation
India, Brazil and South Africa (IBSA) have joined forces to help boost job creation globally. IBSA launched a South-South co-operation programme at the International Labour Organisation (ILO) in Geneva, to help the global economy rebound after the recession. The programme aims to promote a job-intensive recovery from the global economic downturn, create a framework for sustainable growth and support for the ILO Global Jobs Pact. "It reflects the view of the IBSA governments that through a spirit of solidarity and non-conditionality, developing countries can provide sustainable solutions to their own problems, can change people's lives and make a positive impact. "The purpose ... is to promote national ownership of the project, strengthen local capacity, and ensure sustainable development," the Department of International Relations and Co-operation said November 24. Earlier this year, the UN honoured IBSA for their efforts in the fight against poverty using innovative approaches to share, replicate and scale up successful development paradigms. Each IBSA country contributes US$1 million annually to a fund which is managed by the UN Development Programme Special Unit for South-South Co-operation. Projects are executed by various UN agencies and partners across the globe, with a strong emphasis on national ownership. These projects focus on the sharing of best practices and proven experiences, and include initiatives as diverse as improving agricultural techniques in remote villages, reducing urban violence in slums, or delivering safe drinking water. Current IBSA initiatives include projects in Haiti, Guinea Bissau, Cape Verde, Burundi, Palestine, Cambodia and Lao PDR. IBSA is a trilateral, developmental initiative between the three countries aimed at promoting South-South co-operation and exchange. The group, which was established in 2003 to boost South-South ties, has a total population of about 1.4 billion and the Gross Domestic Product of over 3.2 trillion US dollars.

Praise for Gordhan's Medium Term Budget
Finance Minister Pravin Gordhan's Medium Term Budget Policy Statement (MTBPS) has been welcomed by some economists and business, who said there were a lot of positives to be taken from it. Gordhan tabled the MTBPS in Parliament October 27. The policy statement touched on government's New Economic Growth Path; proposed harsh penalties to curb fraud and corruption; outlined government's commitment to help provide jobs and pledged an extra R100 million to help fight HIV and Aids, among others. "It is certainly more upbeat than the budget speech in February," said Isaac Matshego, an economist with Nedbank. Matshego highlighted the increase in government revenue - which grew from 27.2 percent of GDP (R666.9 billion) to 28.4 percent (R761 billion) in the current financial year - as one of the encouraging features of the policy statement. GDP growth, which was expected to come in at 3 percent for this year, higher than expected, was also welcomed. On the New Economic Growth Path, Matshego said it followed on the policy action plan and was a move in a positive direction. "The challenges facing South Africa's economy are being addressed. The growth path targets sectors such as manufacturing, where employment creation is likely to come from," he added. Chose Choeu, president of the South African Chamber of Commerce and Industry (SACCI), welcomed the commitment made to combat fraud and corruption through more effective and efficient financial management and governance. Choeu was also pleased with the delivery agreements and strategic plans for government entities. He further applauded the commitment to infrastructure such as transport, electricity and communications, all of which would support the business environment. However, Choeu acknowledged that all of this unfortunately came at a cost to the public sector debt through an increase in tariffs and user fees. SACCI also welcomed the relaxation of exchange controls and investment limits, as well as the minister's undertaking to improve service delivery. "We are concerned about our inability to achieve targets on critical health matters, provide quality education to our children and reduce the level of unemployment," Choeu added. SACCI also called for government's efforts to strengthen regulation in the financial sector, characterised by greater effectives but less bureaucracy and red tape.

Gordhan Gets It Right On the Rand
The rand exchange rate loomed large over Finance Minister Pravin Gordhan's medium-term budget policy statement October 27. That was to be expected given the domestic and international economic context. Amid talk of a global "currency war" and dire warnings of the implications if this spills over into tit-for-tat protectionism in international trade relations, there were high expectations that the government would have to take concrete steps to prevent the rand's continued appreciation against the dollar. Mr Gordhan did not disappoint, confirming pre-budget speculation that at least part of the expected revenue overshoot for the current fiscal year will be used to support the Reserve Bank's efforts to shore up the country's foreign currency reserves, and announcing a further significant relaxation of exchange controls. At the same time, both the Treasury and Reserve Bank make no bones about their relative powerlessness to turn back the tide of foreign funds that continue to seek the higher returns offered by emerging markets such as SA. There are no plans for a so-called Tobin Tax on "hot" short-term money, for instance, largely because the jury is out on whether these make much difference in all but the short term. It is far from clear that the measures announced yesterday will serve this purpose either, although they are worth pursuing in their own right. While in a healthier position now than in the past, SA's foreign currency reserves are still low by international standards and would have had, anyway, to be expanded to provide a decent cushion as the global economy recovers and trade picks up. Similarly, the vestiges of exchange controls needed to go sooner rather than later, and the current direction of the flow of funds provides a window of opportunity it would have been unwise to miss. That they may give currency traders reason to think twice before treating the rand as a one-way bet, at least for a time, is more of a bonus than an end in itself. The solution to the "currency war" lies in international agreements, not unilateral action, and there are promising signs that the recent Group of 20 meeting at which this issue was discussed was not as fruitless as initially feared. The rand weakened sharply in anticipation of Mr Gordhan's policy statement and held steady above R7 to the dollar, indicating that there is a degree of uncertainty over the short-term effects the measures he announced will have on the currency market. Nobody knows precisely how much ammunition the Bank now has at its disposal, nor the full extent of the "blocked" assets emigrants have up until now been prevented from taking with them, or whether they will now seize that opportunity. Given that investment returns in the developed world will be limited for some time, the immediate outflow could be minimal. If not, it does no harm to keep those engaged in the carry trade guessing. However, as important as the rand exchange rate may be to SA's economic health in the short term, it is a bit of a red herring in the context of the government's medium-term budget policy. This is intended to provide a budgetary framework for the coming three years, and give direction for the longer term. As overwhelming as the economic effects of international monetary flows may seem, they will not last forever and it is important that SA makes the structural adjustments that are required to achieve our domestic social and economic goals regardless of the buffeting from abroad.

Treasury to Use Surplus to Buy Reserves
The Treasury took bold steps to halt the rand's sustained gains October 27, saying it will use some of this year's R30bn budget revenue overrun to fund the purchases of foreign exchange reserves. Finance Minister Pravin Gordhan also announced that foreign exchange controls will be relaxed for residents and overseas emigrants, and through a new regulatory framework for private and public pension funds. "We recognise that the value of the rand is a critical challenge in our growth strategy. We appreciate that sustained exchange rate overvaluation creates difficulties for many businesses and threatens jobs in some sectors." The rand weakened 1,6% to R7,05 to the dollar after the news, which signalled that SA is joining efforts by emerging markets to curb gains in their currencies, driven by huge capital inflows in the global hunt for yield. Earlier in October it scaled a 33-month peak at R6,76/, adding to concern about the effect of its strength on the global competitiveness of local exports. Neither Mr Gordhan nor the Reserve Bank's governor Gill Marcus would say how much of this year's revenue overrun will be used to build foreign exchange reserves, which at 44,1bn lag other emerging markets. "We don't want to indicate what we have in our pockets at the moment," Ms Marcus said. Foreign exchange reserves are a key buffer against external economic shocks, and the Treasury and the Bank joined forces early this year to step up the pace of accumulation. Mr Gordhan said that since the start of this year, foreign exchange purchases and "swap" interventions by both the Treasury and the Bank have reached R43bn - without halting the rand's rally. The focus should not be on making the unit depreciate but on finding ways to stop it from appreciating, Ms Marcus said. She said the Bank will not target a specific exchange rate, but wants to mitigate the influence of an "overvalued" currency. The Treasury said the rand is trading at about 12% above its 10-year average - the first sign of how much the government believes it is overvalued. In a surprise move, the Bank said it will remove a block on the assets which emigrants can take out of SA. They had been allowed to remit up to R8m offshore, with the rest released on payment of a 10% exit levy - now to be scrapped. Modernising SA's prudential framework for private and public pension funds will lead to higher limits on the amount which they could invest offshore, Mr Gordhan said. The Bank also proposed a R4m lifetime offshore investment limit for individuals be lifted to R4m a year, subject to tax compliance.

GDP Growth Slows
South Africa's real Gross Domestic Product (GDP) slowed to 2.6 percent quarter-on-quarter in the three months to the end of September 2010, falling below market expectation, said Statistics South Africa (Stats SA). The figure is the lowest to date for this year. GDP for the second quarter was revised down to 2.8 percent from 3.2 percent. Stats SA's Deputy Director General, Dr Rashad Cassim, said November 23 that the numbers showed the economy is far from reaching the 7 percent growth needed by the country to turn the tide on job creation and poverty. He fingered the manufacturing sector as one of the main culprits responsible for the weak growth. "I suspect that part of the problem is the exchange rate," said Cassim. Manufacturing, according to Stats SA, showed negative growth of 5 percent, partly due to lower production in the motor vehicle, parts and accessories sector as a result of the recent strike. The mining and quarrying, wholesale, retail, motor trade and accommodation industries were the major contributors to the 2.6 percent figure. General government services in the third quarter slowed to 0.4 percent from a seasonally adjusted figure of 4.6 percent in the second quarter. "The important point is that the low number has little to do with government cutting jobs," said Cassim, adding that this had to do with the impact of the strike action. Kedibone Mabaso, GDP manager at Stats SA, said the remaining 11 days of the FIFA World Cup that fell into the third quarter did not translate into growth. Market expectation was that GDP would increase above 3 percent. "The softer trend was further aggravated by a combination of weak construction activity and slower growth in domestic trade and accommodation, as well as transport and communications off the high base established in the second quarter. "These developments largely offset the impact of a strong rebound in mining output, higher agricultural output and stronger activity levels in the broader finance and real estate industries," Nedbank said in reaction to the data. Nedbank expects growth to improve slightly in the last quarter, as manufacturing bounces back from strike disruptions. "However, for the year as a whole, we are still forecasting 2.8 percent and 3 percent in 2011," said Nedbank. Stats SA said that real annual GDP decreased by 1.7 percent in 2009 after a 3.6 percent increase (revised from 3.7 percent) in 2008.

SARB Cuts Repo Rate by 50 Basis Points
The SA Reserve Bank (SARB) cut the repo rate by 50 basis points to 5.5 percent, governor Gill Marcus said November 18. Standard Bank and Nedbank have already announced that their prime rate would now fall to nine percent, in line with banks' traditional responses to repo rate changes. This was the lowest it had been in 30 years, Marcus told a media briefing. She emphasised that when making its decision on rates, the Monetary Policy Committee's (MPC) focus is on the "situation that might exist 12 to 18 months hence". The MPC found the risks to the longer term inflation outlook to be "fairly evenly balanced". "The domestic economic recovery remains fragile, and the adverse global developments make the growth outlook more uncertain," she said. "The view of the MPC is that there is room for further stimulus, given the weakness in the supply side of the economy." The decision to lower rates was based on various factors, including an improved outlook for domestic inflation. "Since the previous meeting of the Monetary Policy Committee (MPC), the outlook for domestic inflation has improved further against the backdrop of a continued negative domestic output gap and sustained strength in the exchange rate of the rand," said Marcus. The governor said they expected an average inflation rate of 4.3 percent for 2010. This fell within the target range of three to six percent. "Inflation is then expected to remain at an average of 4.3 percent in 2011 and to increase to 4.8 percent in 2012," she said. Marcus said the main risks to inflation included rising wages, and increasing food and petrol prices. "Global food prices have been affected by adverse weather conditions in a number of regions, but the impact on domestic prices has been counteracted in part by the rand exchange rate trends and the bumper maize crop. "The exchange rate has also moderated domestic petrol price increases." Marcus said the global economic recovery "has continued in an uneven manner". The outlook for domestic growth remained subdued. "The forecast of the Bank is relatively unchanged since the previous meeting of the MPC, with GDP growth remaining at 2.8 percent for 2010 and expected to average 3.3 percent and 3.6 percent in 2011 and 2012 respectively."

South Africa Welcomes IMF Steps to Reform
Finance Minister, Pravin Gordhan, said the reform of the International Monetary Fund (IMF) was an important step towards Africa's voice being heard on the world stage. "There are two additional chairs that the Europeans will make available and a six percent change in quota ... It's the most substantial change that the IMF has gone through," Gordhan told reporters at a briefing November 15, after the G20 meeting in Seoul. Before departing for the two-day summit, the minister said that South Africa would push for a sub-Saharan chair on the board of the IMF. "The question is, who will occupy those chairs? Our President [Jacob Zuma] made a plea that one be reserved for sub-Saharan Africa. We now have three chairs in the World Bank, we think that Africa needs to have three on the IMF as well," explained Gordhan. The quota system review should be complete by 2013 and allocations made in 2014. The minister said the meeting acknowledged the need for strengthened participation between countries in formulating policies, as ultimately, economies were inter-linked. "Despite the many views, the G20 is still quite cohesive," said Gordhan. Unemployment and development around the globe is another matter that was discussed at the meeting. "Growth cannot take place when only a few benefit. There should be shared growth. Unless we get the balance right, we are not going to bring developing countries and least developing countries to a point where they benefit," said the minister. On the matter of financial sector reforms, Gordhan said there was consensus that countries begin to look at their currency systems differently, especially in light of the prevailing crisis. "The G20 was not able to say the specific things that we are going to do about some of the currency dynamics... [but] you will find in six months a lot of debate around this issue," said Gordhan, reassuring that the massive capital inflows will not last forever.

G20 Should Close Gap Between Rich, Poor – Zuma
South Africa will work tirelessly to ensure that the agenda of the G20 helps close the development gap between the rich and the poor, President Jacob Zuma said November 11. He was speaking at a United Nations Millennium Development Goals (MDGs) Forum taking place on the sidelines of the G20 summit, underway in Seoul, South Korea. "South Africa needs to continue putting pressure on developed countries to mobilise resources to support growth and development. Developing countries should be recognised as equal partners in the development of their economies," he said. He said with only five short years left before the UN 2015 deadline to achieve the MDGs, countries needed "a far greater sense of urgency" if the targets are to be met. Working together with other member countries, South Africa's participation in the G20 would seek to ensure that the work of the forum retains a central focus on sustainable development. The development focus should enable the forum to take the undertakings of previous Summits forward, he added. "The G20 should play an active role in addressing critical development issues. This G20 summit should take us forward in narrowing the development gap to achieve strong, sustainable and balanced growth and to ensure a more robust and resilient global economy for all." Zuma said South Africa was honoured to have been invited to join South Korea as Co-chair of the Development Working Group of the G20, adding that the group had identified a set of key interventions that will help to improve the economic growth of developing countries in the long run. These interventions, he said, will be submitted to the Summit for consideration. "The G20 should play an active role in addressing critical development issues. This G20 summit should take us forward in narrowing the development gap to achieve strong, sustainable and balanced growth and to ensure a more robust and resilient global economy for all," said Zuma.

 

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