Geopolemics.com :: South Africa

Countries: South Africa
Posted on Wednesday, December 23, 2009 - 02:40 PM
	The Recession is OVER, SORT OF! The recession in South Africa has ended, with the economy turning mildly positive after three negative quarters as the manufacturing sector bounced back in response to a pickup in global demand, and spending by the government helped to cushion the economy from the downturn. Statistics SA said November 24 the economy grew at an annualised 0,9% in the third quarter of this year, after contracting at revised rates of 7,4% in the first quarter and 2,8% in the second quarter. The third-quarter figure was better than market expectations. Manufacturing was the largest contributor to the recovery, as it benefited from stronger export demand and a slowdown in de-stocking. The government, construction and personal services sectors contributed but mining and agriculture were in negative territory, as was the trade sector. But economists cautioned that the recovery was likely to be slow and there was no guarantee yet that things would not go wrong. Statistics SA's head of economic statistics, Rashad Cassim, pointed out that on a non-annualised basis, quarter-to-quarter growth was small at only 0,2%. Cabinet has expressed its deep concern about the spate of attacks on foreign nationals at De Doorns in the Boland. Hundreds of foreigners were forced to flee their homes in informal settlements around De Doorns November 17 after angry residents destroyed their shacks and accused them of stealing their jobs. Briefing the media after Cabinet's fortnightly meeting November 18, government spokesperson Themba Maseko said police would act decisively on this "negative tendency." He said: "As government we have to ensure that South Africans and foreign nationals can feel free and safe." The global economic recession has hit South Africa hard; the government's latest labour force survey said 484,000 jobs had been lost in the last six months, and unemployment stood at 24.5 percent for the period July to September 2009, up from 23.2 percent during the same period in 2008. Van der Westhuizen said that the situation had been tense since November 13, when Zimbabweans had been involved in a violent spat in an informal tavern. "Following that incident, some 68 Zimbabweans" had fled the area, fearing a resurgence of xenophobic violence. In May 2008 a tide of xenophobic violence erupted in Johannesburg and quickly spread through most parts of the country, killing more than 60 people and displacing about 100,000 others. Jacob Zuma, has prompted anger with a reported R65m (£5.3m) expansion of his personal residence in one of the country's poorest regions. Zuma's rural homestead will gain a police station, helipad, military clinic, visitors' centre, parking lot for 40 vehicles and three houses, according to South Africa's Mail & Guardian newspaper, which claimed taxpayers would foot "the largest chunk of the bill". New houses are apparently being built to accommodate Zuma's three wives, the paper said. Critics accused the president of "conspicuous consumption in the face of dire poverty". The rural family homestead is in Nkandla, in KwaZulu-Natal province, where many of Zuma's neighbours lack electricity or running water. Official figures show that more than half of KwaZulu-Natal's 10 million population live in poverty, with 1.2 million surviving on less than R200 (£16) a month. Sources told the paper that the expansion will cost an estimated R65m. The costly transformation was criticised as insensitive a day after Zuma warned that more jobs could be lost because of a recession that has put nearly a million out of work. The South African presidency said no government funding would be used for Zuma's household, but the state would be responsible for the adjacent developments. "We … reject any insinuation that there could be any untoward abuse of state resources by the president or his family," it said, as they would. Future social historians will make sense of it all…. if you can wait. South Africa will lose more jobs in spite of the recession ending and a task team's efforts, President Jacob Zuma warned December 3. And trade unions are also sceptical that the government would meet its ambitious target of creating 500,000 job opportunities by the end of this year. Zuma told reporters in Pretoria that the partners who had crafted the country's response to the global economic meltdown had done the best they could under the circumstances, which is no doubt true, but doesn’t explain why such totally unrealistic targets were given out by him at election time. Warning on further job losses underlines the fact that, even though South Africa emerged from recession in the third quarter of this year, the pace of recovery has been slow. "Although the economy is beginning to grow again, the crisis is still with us, especially for the poor and working poor," Zuma said. The economy has shed close to a million jobs this year and the unemployment rate has increased to 24,5%! As Gill Marcus took over as Governor of the Reserve Bank November 9, economists praised her experience in the banking sector. Marcus takes up her post amidst South Africa's first recession in 17 years and a difficult economic climate. She is replacing Tito Mboweni. With regards to the calls for inflation targeting to be abandoned, announced by the government in 1999, any changes to inflation targeting should be in consultation with government. At the last monetary policy committee meeting, the bank announced that it was expecting inflation to fall between the 3 and 6 percent target range in the second half of 2010. Investment Solutions senior economist Chris Hart said the two biggest challenges facing the bank were the maintenance of its credibility and independence. The former deputy minister for finance was appointed to the post in July. The Reserve Bank kept interest rates steady November 17 as expected with new governor Gill Marcus highlighting the role global events play in South Africa's tentative economic recovery. Proposed Eskom electricity price hikes still posed the main inflation threat, and the outlook had not changed much since the Bank's monetary policy committee meeting in October, she said. Given uncertainty on those tariffs and the strength of the global economic recovery, the committee had decided to leave the repo rate steady at 7%, she said. Marcus, turned protocol on its head by bringing the entire committee into the televised press conference after its deliberations. She made it clear she would not bow to pressure for more rate cuts from the government, trade unions and business leaders. She also dismissed calls for the Bank to engineer a more competitive level for the strong rand, which some fear will derail South Africa's recovery. The Bank trimmed lending rates by five percentage points since last December in a bid to propel SA out of its recession. It eased monetary policy even though inflation breached its 3%-6% target range since April 2007, rising by 6,1% in the year to September. Marcus said the Bank expected a sustained return to target by next year's second quarter, but inflation might subside below 6% temporarily before then. South Africa has to deal with structural problems, such as poor education, HIV/AIDS and crime, to achieve sustainable economic growth, the World Trade Organisation (WTO) said in its trade policy report on South Africa, released November 4. The report forms the basis of the third Trade Policy Review of countries in the Southern African Customs Union (South Africa, Botswana, Swaziland, Lesotho and Namibia). "Unemployment and poverty remain the most pressing economic problems along with the electricity supply shortages, which threaten near-term growth prospects," the WTO said. Further investment in electricity infrastructure and opening up the economy to greater competition in services would help to enhance efficiency and accelerate growth. South Africa's ballooning budget deficit did not pose an immediate threat to its credit rating, but political will to restore fiscal discipline when the economy recovered could prove challenging, rating agency Standard and Poor's (S&P) said November 5. Trade unions are campaigning for the government to keep its fiscal stance expansionary over the next three years to allow more growth in official spending. Deputy Finance Minister Nhlanhla Nene said that relying heavily on the government to support demand could not be sustained indefinitely, and the budget deficit must be curbed. "If done for too long, public debt would rise to unsustainable levels, imposing a harsh cost on the next generation." In its medium-term budget, the Treasury forecast its budget deficit would leap to 7,6% of gross domestic product (GDP) this year from 1% last year - its highest since the early 1960s. It plans to reduce the shortfall to 4,2% of GDP by fiscal 2012-13. Institutional Corruption The credibility of the parole system has been damaged by the release of President Jacob Zuma 's former financial adviser, Schabir Shaik, on medical parole, the head of the Council for Corrections, Judge Siraj Desai, said November 4. Medical parole is legally applicable only to terminally ill prisoners but since his release this year, Shaik has been seen driving around Durban, celebrating in a restaurant and reportedly playing golf. Two successive correctional services ministers, Ngconde Balfour and Nosiviwe Mapisa-Nqakula, have refused to refer the matter to the parole review board, which Desai also heads. While briefing Parliament's correctional services committee on the operations of the council, Desai was asked by Democratic Alliance MP James Selfe about the image of parole in the eyes of the public, to which he responded that the credibility of parole as a correctional instrument had been damaged. He suggested the law be changed to remove the power to refer paroles from the hands of the minister and the commissioner and given to the Council for Corrections. Selfe said. "South Africa currently has two parole systems; one for the rich and politically connected and another for those that do not have connections." Medical parole is not considered in the majority of cases where inmates are actually terminally ill. During 2008 only 54 inmates were released on medical parole." Ministers responsible for Gender and Women Affairs in the Southern Africa Development Community (SADC) have commended South Africa for being placed third in the world in terms of women representation in Parliament. SADC has a target of achieving 50/50 representation of women in politics and decision-making positions by 2015. After the general elections in April this year, the number of women in the South African National Parliament increased from 34 percent to 45 percent. According the Department Women, Children and Persons with Disabilities, this represents an 11 percent increase which has pushed South Africa from number 17 to the third position in the global ranking of women in Parliament, after Rwanda which is at 56 percent and Sweden at 47 percent. The government of South Africa acknowledged that there was still a lot of work to be done to improve the status of women in both the public and the private sector in the region. Women are still carrying the heaviest burden of HIV and AIDS, which is affecting the region the most. Maternal deaths and child mortality remain at an unacceptably high level affecting many development indicators including the efforts to achieve Millennium Development Goals. Growth in the economy could be reduced by as much as 1.5 percentage points over the next three years if power utility Eskom got the go-ahead for its revised tariff hikes, South Africa's largest business group warned December 9. Eskom has adjusted its tariff increase proposal for each of the next three years down to 35% from an initial 45%, taking account of lower than expected demand. But the hikes would still put upward pressure on inflation and lead to further job losses, Business Unity SA (Busa) said in a briefing on the economy. "We must be careful not to administer any shocks to the recovery, which is in a vulnerable and fragile stage," said Busa deputy CE Raymond Parsons. Retail sales dived faster than expected in October while factory output fell less steeply, official data showed December 9, painting a mixed picture of two key sectors. Eskom's proposed tariff hikes are to fund its ambitious expansion plans, but will take a toll on the economy, emerging from its first recession in 17 years. The crisis at Eskom deepened November 9 with board chairman Bobby Godsell resigning and citing lack of support from the government in the fiasco over CEO Jacob Maroga's resignation. In a statement, Godsell blamed the government for the impasse, which has paralysed the utility. With Godsell resigning, Maroga has won his battle to stay on as CEO. Eskom sources said that Maroga wrote a strongly worded letter to Public Enterprises Minister Barbara Hogan in which he "affirmed" his position as Eskom CEO and director. Congress of South African Trade Unions general secretary Zwelinzima Vavi denied claims of racism levelled against Godsell, describing his resignation as a "loss" to Eskom. "Bobby Godsell is well experienced. He is a well-schooled negotiator. (He is) definitely not a racist, and (he) definitely supports transformation," Vavi told SABC news. The whole affair has raised criticism that the issue at hand is the proper provision of electricity to the country and not an issue of race. The 2010 FIFA World Cup is expected to inject R55 billion into the domestic economy, according to the Deputy Minister of Water and Environmental Affairs, Rejoice Mabudafhasi. The deputy minister said the Grant Thorn auditing firm, who had conducted the original economic impact assessment for South Africa hosting the World Cup, had found that not only would the event inject R55 billion into the domestic economy, but also create an estimated 415,000 new jobs, which is hard to believe in January of that year. "Moreover, the country's GDP will be boosted by R33 billion in direct spending on stadiums and infrastructure, while soccer fanatics will spend some R8 billion and tickets sales will generate R6 billion," she said. The auditing firm had also found that the government would rake in about R19 billion in tax revenue. "Given the scenario ... it is an event of significant and far-reaching economic impact," said Mabudafhasi. The success of the 2010 Final Draw is a glimpse of what South Africa will deliver to the world during the World Cup, says Deputy President Kgalema Motlanthe. "I trust that the success of the Final Draw has provided you with a strong sense of the passion, flair and professionalism with which South Africa is preparing itself for the historic first FIFA World Cup tournament in Africa," he said at the first World Press Day December 5. Motlanthe, who also chairs the Inter-Ministerial Committee which is tasked to oversee government's preparation for the tournament, told international and local press that government remains confident that the country will host the best World Cup ever. The World Press Day was organised by FIFA to outline and discuss the role of the media in making the World Cup better, not only for next year but for other coming tournaments. Zuma Outraged at Xenophobic Attacks President Jacob Zuma has used South Africa's Day of Reconciliation to denounce attacks on migrants from elsewhere in Africa who are living in the country. "We are outraged by the reports of ill-treatment of foreign nationals in some parts of the country," Zuma told a celebration in Tshwane. "Such attacks go against the spirit and letter of our Constitution and our track record of respecting human rights and promoting dignity." He was speaking after continuing xenophobic attacks in which migrants - particularly Zimbabwean and Somali refugees - have been chased out of the poor communities in which they live. South Africans struggling to make a living claim migrant workers take their jobs and reduce pay levels, and that migrant shopkeepers undercut the prices charged by local businessmen and women. Addressing the issue of former South African freedom fighters, Zuma said they had been treated with "dignity, solidarity and friendship in countries such as Zambia, Mozambique, Angola, Uganda and even as far afield as Ethiopia and Algeria." He called for "an improved understanding" of the plight of refugees and of why they were in South Africa. "There needs to be an understanding that not all foreign nationals are in South Africa illegally," he said. "Legal immigrants contribute constructively to the economic and social development of our country." He added: "Let us embrace especially our African brothers and sisters, who usually bear the brunt of ill-treatment more than foreigners from other continents." He said the government's Department of Home Affairs was formulating new policy which would enable more human treatment for foreign nationals. Does a DA – COPE Merger Have a Hope of Taking on the ANC The much-punted possible merger between the Democratic Alliance (DA) and the Congress of the People (COPE) will succeed only if two fundamental issues are successfully negotiated. The one is leadership - who should be the face of the merged party? The other is ideological - should the merger continue in the DA's libertarian vein or carve out a more progressive, social justice foundation? The leadership question is easier to resolve - in theory. A lofty desire to make the world a better place is never the sole source of motivation for entering politics. Politics is ultimately about gaining power. Both the DA and COPE presumably desire at some point actually to govern SA. A crafty mixture of principle and pragmatism is needed to get there. This means accepting that the South African electorate would vote only a black-led party into power in the foreseeable future. Whether this is good or bad is neither here nor there. It is a fact. The implication is that a merger between the DA and COPE must have a black face. This may be a bitter pill to swallow for some of the current DA leadership. After all, they are the official opposition with a much larger support base than COPE. However, they would be naive to negotiate a merger with COPE solely on the basis of this year's election results. They must take account of likely patterns of voter behaviour in the future. But once you venture into that kind of crystal ball gazing - which itself, of course, requires some analysis of past voter behaviour - one inevitably faces the truth that race remains an important strand in voter decision-making. This means that if the senior leadership within the DA really cares about maximising the chances of a merger being bigger and better than both the DA and COPE, they must accept the strategic necessity of a black-led merger. Fortunately - if reliable political sources close to the action are to be believed - most senior leaders within the DA understand this, including the parliamentary leader, Athol Trollip. It is not so clear that DA leader Helen Zille understands or accepts this. One cannot blame her. She has done well to keep the DA on an upward trajectory in its post-Leon phase and no doubt she would therefore want to cling to the personal power and career success that she has amassed. But unless she, and other like-minded leaders close to her, can put the goal of maximising party success at the top of political priorities, a merger will be doomed. The white-led DA has reached a glass ceiling. A black-led merger presents the only chance of further growth. Of course, even if it is accepted that a black leadership is important for strategic reasons, complications will remain. Who, exactly, among black leaders within both the DA and COPE could lead a merged party? Certainly not Mvume Dandala or Mosiuoa Lekota. Dandala has been a shoddy parliamentary leader for COPE. He should exit the political stage. Lekota, in his turn, has failed to build COPE structures on the ground and has lost all political fizz over the past months. The only serious candidate within COPE for leading a merged party is Mbhazima Shilowa. Even then, Shilowa does not exactly have gigantic gravitas and needs to become a much better and more charismatic leader. If he were to lead a merger, a team of communications experts and political consultants would be a necessary part of the toolkit. A black leader from within the DA ranks would be preferable, as that would mitigate against legitimate fears among the DA leadership that COPE stands to gain more than the DA,from a merged opposition. The problem, of course, is that the DA has been shoddy at successfully nurturing or attracting senior black leadership. How all this plays out will determine the success of a new outfit. For the sake of SA, it is necessary that the ruling party finally be given a serious run for its liberation money. Only a black-led merger can fulfil that role. On the ideological front there may be even deeper disagreement. The DA has already made it clear it will merge only with parties that are willing to buy into its mantra of an open, equal-opportunity society for all. Of course, that phrase sounds rather inviting but it is, in the first instance, vague and uninformative. With deeper knowledge of the DA's character, however, we can translate the notion of an "open, equal opportunities society for all" into simpler English. What it really means is that formal equality, such as equal treatment of all persons with no regards to cumbersome things such as social histories, are much more important than substantive equality. It means social justice interventions in the socio-political life of the country, which demand unequal treatment in order to ensure equitable outcomes and adequate redress of past, systemic inequalities, should be viewed with scepticism. This cannot be stated baldly and so Zille has to resort to euphemistic political phrases - but the libertarian undertones fool no one. It is perfectly acceptable for any political party to be centre-right in its economic or social thinking. Political pluralism is not to be scoffed at. But such an ideological outlook will not see the light of day in SA in our lifetime. It is a recipe for remaining in the opposition benches. And, in fact, rightly so - it is callous to be a-historical in crafting an ideological foundation for a country. The point is simple. A merged opposition would have to adopt a different tone and political identity from what some within the DA leadership would be comfortable with. That will prove the greatest stumbling block in creating a successful opposition to the African National Congress. It does not help that COPE still has no clear ideological foundation, let alone specific policies that flow from such a foundation. So it has little to bring to the negotiating table. When it does hastily put something together, it is to be hoped social justice principles will prevail and that all parties to the negotiation of a merged opposition can accept this alternative character for an opposition merger. Perhaps most importantly, these two issues - who should be the face of the merger and what should be the character of the merger - should be discussed with detailed input from DA and COPE members and supporters to ensure legitimacy and grassroots buy-in. For the sake of defeating one-party domination, we should all hope an opposition merger is successfully negotiated before the next set of parliamentary elections. South Africa Vows to Treat all Babies With HIV All South African babies under the age of one will be treated if they test HIV-positive, President Jacob Zuma has announced in a major policy overhaul. In a speech to mark World Aids Day December 1st, he said he hoped anti-retroviral drugs would save infants' lives. And he announced he was preparing to take an HIV test himself. South Africa has 5.5 million HIV-positive people - the highest number in the world - and 59,000 babies are born infected each year. Mr Zuma's speech is a marked departure from his predecessor, Thabo Mbeki, whose government denied the link between HIV and Aids. Mr Mbeki's critics have accused him of causing about 300,000 deaths by not rolling out anti-retroviral drugs to people with HIV quickly enough. Currently, treatment is available in South Africa only for people whose immunity levels have been significantly reduced by HIV. Mr Zuma announced in his speech that the drugs would be available more widely to children and pregnant women. He described it as the start of "an era of openness" and urged South Africans to take responsibility for themselves. "I am making arrangements for my own test," he told crowds in Pretoria. "I have taken HIV tests before, and I know my status. I will do another test soon as part of this new campaign. I urge you to start planning for your own tests." He said the measures would come into force in April next year. Analysts say South Africa already runs the world's largest anti-retroviral programme - but almost one million people still go without treatment. The US has announced it will give $120m (£73m) to help South Africa buy more anti-retrovirals, in response to a request from Pretoria. The rate of HIV infection in the country has levelled out - with no increase in the number of people contracting the virus each year. But health campaigners are warning that the number of Aids-related deaths is set to rise significantly in the next five years, as the illness takes effect on those who have had it for a long time. South African charities warned that 5.7 million children - a third of all South African children - could become Aids orphans by 2015. Currently there are 1.4 million Aids orphans in the country. Economy Moves Out of Recession South Africa's economy turned around in the third quarter of 2009, registering marginal growth, the government's statistics agency reported November 25. "The seasonally adjusted real GDP at market prices for the third quarter of 2009 increased by an annualised rate of 0,9 per cent compared with the second quarter of 2009," Statistics SA said in a statement issued in Pretoria. In the first half of 2009, the country had registered negative growth rates compared with figures six months earlier. The agency said the main contributors to the turnaround had been manufacturing, general government services and the construction industry and personal services. But activity in other industries - finance, real estate, business services, mining and quarrying, agriculture, forestry and fishing, wholesale and retail trade and hotels and restaurants - had continued to shrink. The agency also noted that the "unadjusted real GDP at market prices" for the nine months of 2009 had declined compared to the same period in 2008. The chief executive of the South African Chamber of Commerce and Industry, Neren Rau, said it had long believed manufacturing would lead the economy out of recession. But, it added, "the South African economy remains vulnerable. Failure to recognise the fragility of the improvement will impair the country's ability to gather the momentum required for sustained improvement." OECD Predicts Economy to Grow 2.7 Percent Next Year A top think-tank sharply raised its forecasts for the global recovery November 19, and gave a surprisingly upbeat assessment of SA's economy over the next two years. The economy would expand 2,7% next year - well above official forecasts for growth of 1,5% - the Organisation for Economic Co-operation and Development (OECD) said. It sees local output back at its potential growth rate of 4,5% by 2011, surpassing government estimates of 2,7%. "Real growth will be negative in 2009, but should turn positive in the fourth quarter and accelerate in the first half of 2010, boosted by the Soccer World Cup," the OECD said. Global growth would surge to 3,4% next year, after contracting 1,7% this year, the OECD said in its latest twice- yearly economic outlook. But it warned that the recovery spreading across its 30 developed-country members was still "too timid" to halt a continuing rise in unemployment. The OECD jobless rate would rise to 9% next year from 8,2% this year. "Overall, unprecedented policy efforts appear to have succeeded in limiting the severity of the downturn," the OECD's chief economist, Jorgen Elmeskov, said. "It is now time to plan the exit strategy from crisis policies." But he added in a statement that "radical policy action will be required in the years to come" to restore sound economic balance, healthy growth and low unemployment across the world. The expected global recovery would be driven by emerging-market giants like China, SA's biggest trade partner, which the OECD sees expanding by more than 10% next year. US growth is forecast to be 2,5% next year while the euro zone would expand by a meagre 0,9%, the Paris-based think-tank said. SA's Treasury says its growth forecasts for next year are well below consensus estimates of 2% because it is not as optimistic about a global recovery from the recession. The OECD also sees SA's large budget deficit shrinking dramatically over the next couple of years, as tax revenues rise. It predicts the shortfall will subside from 7,3% of gross domestic product (GDP) this year to 5,3% next year and 3,5% in 2011. This compares with official forecasts of 7,6% of GDP this year, 6,2% next year and 5% in 2011. But the OECD warned that SA remained "vulnerable" to a worsening of investor confidence, given its reliance on foreign buying of local shares and bonds to finance the shortfall on the current account - its broadest measure of trade in goods and services. It sees SA's current account gap shrinking to 4,9% of GDP this year, then expanding to 5,7% next year and 6% in 2011, which is in line with official estimates. Although appetite for emerging- market assets in general had picked up and seemed likely to carry on, a renewed flight from risky assets was a possibility, the OECD said. Investor sentiment could also be hit by domestic factors, like pressure on the government for more populist economic policies or renewed electricity supply constraints. "A sudden worsening of sentiment would imply sharp currency depreciation, a retrenchment of imports and much weaker investment and growth. A continued surge in portfolio inflows, on the other hand, could bring a stronger pick-up in domestic demand and output, but ... risk worsening imbalances." Country's Recovery From Recession Lagging - Reserve Bank South Africa's recovery from the global economic downturn appears to be lagging, says the South African Reserve Bank (SARB). However, there are convincing signs that the low point of the current growth cycle has been reached and that positive growth will resume by the fourth quarter of this year. This is according to the Reserve Bank's November Policy Review released November 18. The global recovery has already been reflected in an improved export performance in the past months. "However, the domestic recovery is expected to be hesitant, driven by the inventory cycle and fixed investment projects. Consumption expenditure is expected to take a while longer to recover," explained the bank. The central bank noted that the recovery was not expected to be smooth across all countries and regions, adding that a number of risks still persist. The global recovery would also be dependent to a certain extent on the recovery of consumption expenditure in advanced economies. According to the bank, the global inflation environment remains benign and wide output gaps as well as lower commodity prices have contributed to this outcome. Domestic inflation has also responded to the weak demand conditions, and the inflation rate has reached a level marginally above the inflation target range, said the Reserve Bank. To date South Africa's repo rate has been cut by 500 basis points since last December. At its last meeting for the year early this week Governor Gill Marcus said that the Monetary Policy Committee (MPC) had decided to keep the rate unchanged at seven percent. "By adopting a forward-looking flexible approach, the MPC was able to provide some stimulus to the slowing economy, while maintaining the focus on its price stability objective. Even though some risks to the inflation outlook remain, the current monetary policy stance is deemed adequate to moderate inflation further to within the target range, while simultaneously allowing for the resumption of a positive growth trajectory," said the SARB. Progress in SA-EU Negotiations Auspicious for Sacu - Malin The deadlock in trade negotiations between the EU and South Africa that threatened to break the world's oldest customs union, the Southern African Customs Union (SACU), is set to ease off, thanks to progress being made in ironing out differences between the two parties. The Head of Delegation of the EU in Botswana, Paul MBotswanaalin said he was confident SACU would stay intact after the EU softened its stance and agreed to apply a common tariff to its exports to the region. This was the contentious issue that led to a breakdown in negotiations when South Africa insisted on a Common External Tariff (CET) for the southern African region inspite of its separate trade agreement with the EU - the Trade, Development Co-operation Agreement (TDCA). "In principle, we have agreed to harmonise the TDCA and the interim Economic Partnership Agreement (EPA) so that a common tariff can apply to the whole region," Malin said. "What is left now is to just formalise this and I believe the process should be completed by early next year. However, there are still other issues, such as the Rules of Origin, which might need a bit more time to solve as they might have political connotations as well." Botswana, along with Swaziland, Lesetho and Mozambique, has initialled the interim EPA, while South Africa, Angola and Namibia have remained on the sidelines. However, South African sources indicate that under the current alignment proposal by the EU, new border controls will be required within SACU due to the misalignment of Rules of Origin. In the negotiations towards a full EPA, other outstanding issues remain on trade in services and investment provisions. The negotiating parties are scheduled to meet again in February 2010. Botswana's chief trade negotiator James Masisi has echoed Malin's confidence in the progress being made, though not with as much enthusiasm. "I wouldn't say if the Common External Tariff issue is solved, all our problems are solved because there are still other issues on the South African side such as Rules of Origin and Most Favoured Nation (MFN) status. "But if we manage to align the tariffs so that the region's trade is not segmented, we should be very close to a full EPA. Our next meeting will be in February and we are hopeful it will be fruitful." Masisi has come out of retirement to resume his duties as Government Trade Negotiator for a further five years. He is on secondment from the Botswana Institute of Development Policy Analysis (BIDPA) where he went after retiring from the Ministry of Trade and Industry at the end of last year. Progress in EPA negotiations will be good news for Botswana and other countries in the region that were set to lose considerable revenues if SACU broke up. According to a recent study by BIDPA, Botswana stands to lose the equivalent of up to 29 percent of the total revenue required for the 2009/2010 budget if SACU breaks up. Statistics show that Botswana received R5 634 million from the SACU revenue pool in 2006. "Botswana's dependence on the SACU revenue has grown steadily over time," the BIDPA study says."By 2008, Botswana's dependence on SACU revenue had grown to 27 percent of (the) total revenue (for the) 2007/8 budget. As a result of the global downturn and its impact on diamond exports, the transfers from Pretoria of SACU revenue will be Botswana's single largest source of revenue in 2010." However, Masisi played down the chances of SACU breaking up and the impact it would have on Botswana revenues if it did. "I believe the BIDPA report was a bit unbalanced as it is not a cut throat consequence that Botswana will lose such an amount of money if SACU breaks up," he said. Ironically, Masisi is employed by BIDPA which produced the report. "SACU, which has been around since 1910, has faced many challenges before and it is expected that the organisation will face challenges again in the future. "What is important is that member states are committed to the future of their customs union and we are convinced that this commitment will carry the organisation through this (particular) challenge. When we can find each other as African brothers, we should be allowed to negotiate among ourselves." Zuma Appoints New National Director of Public Prosecutions President Jacob Zuma has appointed Advocate Menzi Simelane as the National Director for Public Prosecutions. The appointment, effective from December 1 2009, was made in terms of Section 10 of the National Prosecuting Authority (NPA) Act 32 of 1998. Advocate Simelane, who had been serving as the Deputy National Director for Public Prosecutions, takes over from Acting National Director of Public Prosecutions, Advocate Mokotedi Mpshe. Advocate Mpshe will return to his position of Deputy National Director of Public Prosecutions. In a statement issued by the Presidency, President Zuma thanked Advocate Mpshe for his leadership of the NPA during a challenging time of transition in the leadership of the institution. He said Advocate Simelane's experience as the administrative head of the Justice and Constitutional Affairs Department and in the legal fraternity,provided him with the necessary skills and capacity to perform his functions efficiently and effectively. "The NPA is a critical arm of the criminal justice system and a key instrument in the broader fight against crime and the implementation of justice. Its independence and vigour in the pursuit of justice must at all times remain unquestionable. We have confidence that Advocate Simelane will make this his utmost priority," said Zuma. According to the statement, Advocate Simelane, born in 1970, completed the B Proc degree in 1993 and an LLB in 1995. He was admitted as an Advocate of the High Court in 1996 and commenced pupillage at the Durban Bar. On successful completion thereof, he joined the Johannesburg Bar in 1997. In 1999, he was appointed as the Commissioner for the Competition Commission, where for five years he was involved in making decisions on mergers and acquisition and anti-competitive practices and their impact on the economy and the economic transformation agenda of government. In June 2005, he was appointed Director General of the Department of Justice and Constitutional Development. In October 2009, he was appointed by the President as the Deputy National Director of Public Prosecutions at the National Prosecuting Authority. "The Minister of Justice and Constitutional Development, Jeff Radebe interacted with the Public Service Commission on matters relating to Advocate Simelane, raised by the Ginwala Commission, and decided not to proceed with disciplinary hearings against Advocate Simelane," said the Presidency. Pikoli May Get State Job After R7,5 Million Payout Former prosecutions head Vusi Pikoli may be offered a government post, two years after his controversial suspension and later dismissal. As part of a R7,5m settlement between President Jacob Zuma and Pikoli, in which Pikoli dropped his court challenge to his dismissal, the government agreed it was "prepared to offer" him a post. The agreement might herald his rehabilitation into government, with Pikoli agreeing to "consider such an offer". Pikoli has been out in the cold since he was controversially suspended by former president Thabo Mbeki two years ago and dismissed by former president Kgalema Motlanthe earlier this year. The agreement said: "The parties now wish to restore their relationship to one characterised by mutual trust and respect." But Pikoli's attorney, Aslam Moosajee of Deneys Reitz attorneys, said Pikoli had not yet made a decision about his future and would not comment on whether he would return to government. The government also "recognised" that Pikoli was "professionally competent, sufficiently experienced and conscientious and (had) the requisite integrity to hold a senior public position". That was vindication for Pikoli, who had argued throughout his battle with the Presidency that these were the qualities required by law for a national director of public prosecutions to be "fit and proper" to hold office. The terms "conscientiousness and integrity" are used in the National Prosecuting Authority Act, which sets out the qualifications required of a national director. The government also reaffirmed its commitment to the principle of prosecutorial independence -- Pikoli's stated reason for challenging his dismissal. The deal was a win for both sides as Zuma can now permanently fill the key post of national director. The Democratic Alliance's Dene Smuts said November 23 that while Pikoli may feel vindicated, the settlement was not a victory for constitutionalism or the rule of law. "It leaves us in the lamentable position that a (national director) who has proven his independence is now out of office for good because of political preference," Smuts said. Moosajee formally withdrew Pikoli's court case in the Pretoria High Court. It was exactly two years and two months since Pikoli was first suspended. Had the court case proceeded, it could have been another two years before it was resolved, and before a new national director was appointed. Moosajee said Pikoli had also agreed to the settlement because he "needed to move on". Dismay As Simelane Succeeds Vusi Pikoli At NPA Controversial former Department of Justice director-general Menzi Simelane was appointed new head of the National Prosecuting Authority (NPA) November 25, prompting dismay in political and legal circles. Simelane replaces Vusi Pikoli, in whose suspension he was instrumental. Former president Thabo Mbeki suspended Pikoli in September 2007. In an inquiry into the suspension, former speaker of the National Assembly Frene Ginwala said Simelane's conduct was "highly irregular" and "left much to be desired". Simelane's appointment raises questions about whether he would be a sufficiently independent prosecutions chief, considering that he was embroiled in Pikoli's ousting. Simelane also drafted the letter that contained an unconstitutional instruction to Pikoli not to arrest former police commissioner Jackie Selebi. Pikoli disobeyed the instruction, precipitating the crisis that led to his suspension and firing. After the Ginwala commission report was released, then president Kgalema Motlanthe noted the findings on Simelane, saying: "Once the honesty of (a) DG is called into question", it needed to be investigated. At the time, then Justice minister Enver Surty had promised to investigate, but the statement from the Presidency announcing Simelane's appointment said Justice Minister Jeff Radebe had decided not to proceed with disciplinary hearings against Simelane after "interacting" with the Public Service Commission. Opposition parties were outraged by President Jacob Zuma 's appointment of Simelane. The Democratic Alliance said it was "difficult to imagine a more inappropriate choice". The Independent Democrats said the appointment showed Zuma's "disregard" for the independence of the authority. Senior political analyst at the Centre for Policy Studies Aubrey Matshiqi said Simelane's appointment was perplexing. The "inauspicious circumstances" under which Zuma became president should have led him to send a strong message about the rule of law and independence of institutions, he said. "This appointment defied that expectation and may send the opposite message that politics must triumph over the independence of our institutions”-a message that now hardly seems in doubt. Selebi's Trial to Be Postponed to February The trial of former police commissioner Jackie Selebi has been postponed to February to allow State Security Minister Siyabonga Cwele to petition the Supreme Court of Appeal. This follows Judge Meyer Joffe's judgment December 1 refusing Cwele's application for leave to appeal against Joffe's ruling last week that former national intelligence co-ordinator Barry Gilder should testify. It is likely that the postponement will delay the case for months if the appeal court decides to hear the case. The prosecution and Cwele's lawyers said they would file the papers to the appeal court before January 15. The trial was then provisionally postponed until February 1. The prosecution wanted Gilder to testify about the existence of an intelligence report with a claim by businessman Jurgen Kogl that Selebi received payments from the Kebble family. In his testimony, convicted drug dealer Glenn Agliotti said Selebi showed him an intelligence report with the claim by Kogl. Cwele's advocate, Marumo Moerane , had argued that a judgment by the appeal court would be clear and definitive on issues raised in the grounds of the appeal, especially the interpretation of section 27.1 of the Intelligence Services Act. The section states: "A former member may not disclose in any form or any manner any information or material to any other person unless the director-general concerned or the CEO , as the case may be, has granted permission for the disclosure of such information or material." Moerane said the court erred in finding that Gilder was a compellable witness. He also said the court erred in violating the principle of the separation of powers. "The court is not in a position to determine what intelligence information may or may not be disclosed. The court is not equipped to do that. " Prosecutor Gerrie Nel said the effect an appeal by Cwele would have on Selebi's trial was not only prejudicial to Selebi, but also to the state as it wanted to finalise the trial as soon as possible. Selebi's advocate Jaap Cilliers blamed the delay on the prosecution. Cilliers said the investigations started four years ago and the prosecution had not managed to procure a statement from him. In his judgment refusing Cwele's application for leave to appeal, Joffe said all the evidence the state sought to adduce had been led in evidence in one form or another. Xenophobic Attacks Draw Condemnation From UN Agency The United Nations refugee agency November 20 condemned the latest xenophobic attacks that have driven some 3,000 foreigners, including refugees and asylum-seekers from Zimbabwe, from a community in South Africa. The incident is the first large-scale xenophobic attack affecting refugees and asylum-seekers in South Africa since May 2008, according to the UN High Commissioner for Refugees (UNHCR), which is sending staff to De Dooms, a farming community 140 kilometres northeast of Cape Town, to work with local authorities to make it safe for foreigners to return there. "We have moved quickly to help the displaced," said UNHCR spokesperson Andrej Mahecic. "They are now awaiting the outcome of negotiations with local farmers who attacked their homes November 17, accusing them of stealing their jobs by accepting cheaper wages in vineyards." Mr. Mahecic told a news conference in Geneva that documented refugees and asylum-seekers have the legal right to work in South Africa, but tensions often erupt over competition for jobs. Those evicted are now staying in a sports field and a community centre in De Doorns, sleeping under three communal tents - each sheltering 1,000 people - supplied by the Government, and receiving meals from the South African Red Cross. UNHCR has donated smaller family tents to help ensure privacy for the families. The agency welcomed the rapid humanitarian response of the local authorities and the fact that water, portable toilets and a mobile health clinic were provided within hours. UNHCR has been supporting efforts to combat xenophobia in the country, where some 45,000 people were uprooted and 62 killed, according to Government estimates, after tensions between South Africans and foreigners erupted into violence in May 2008. Cosatu Insists On New-Look Economy The Congress of South African Trade Unions (Cosatu) is not backing down in its quest to influence economic policy. General secretary Zwelinzima Vavi said November 25 Cosatu wanted a complete overhaul of the economy. "We need a complete mind- set change. We are calling for a new growth path in recognition of the structural crisis in the economy," he said after a meeting of its central executive committee. Cosatu said it would develop a framework on alternative policies on exchange-rate management, interest-rate policy and inflation control. Cosatu's stance comes two weeks after a meeting with its allies, after which the African National Congress (ANC) made it clear it led in making policy. Although it made concessions at the alliance meeting, the announcement is likely to set the tone for strident debate on economic policy among the allies and in the Cabinet. Asked how Cosatu would convince ANC officials, who have already said existing conservative macroeconomic policy would remain, Vavi said the ANC was a "broad church". "I have not heard of a resolution on policy position in the ANC that says the party is tied to conservative macroeconomic policies. We are going to engage with resolutions taken, not individuals," he said. Cosatu said it would also form "tactical" partnerships with business to lobby on specific issues. Manufacturers would be its partner in lobbying on a weaker rand rate and it prefers a rate of R10/ to support the sector. It would partner mining companies to oppose Eskom's proposed tariff hikes of 45% a year for three years. Vavi said there was a need to move away from capital-intensive sectors and focus on more-labour intensive sectors. He blamed past economic policies for what he termed the current crisis. "The underlying cause of the crisis now ravaging the working-class communities is the mistaken policies between 1996 and 2004, of cutting tariffs and privatising basic services, conservative fiscal and monetary policies pursued in those years." The job-loss bloodbath, with SA losing nearly 1-million jobs this year, proved SA was far from getting out of the recession, another reason Cosatu wanted changes to economic policy. "We have lost 959,000 jobs in nine months. The 0,9% growth rate will not cancel that. Even when the economy grew by nearly 6% we never witnessed the unemployment rate declining below 23%. This is what we call a structural unemployment crisis." "More of the same medicine" would not solve the crisis. An overhaul of the economy was needed. Cosatu's alternative framework was also likely to set out its position on the need for a clearer growth and development strategy. Patel to Co-ordinate Economic Policy, Not Create It - Zuma President Jacob Zuma December 14 made clear Economic Development Minister Ebrahim Patel's central role in economic policy, but stressed that the government had already agreed what those policies would be. "Nobody is going to create a new policy; they have been created, they have been implemented," Zuma told Talk Radio 702. Members of Patel's department had to ensure "they don't move in different directions ... We're not saying 'you originate policy'." Zuma said Patel's ministry was created to co-ordinate implementation of policy by all departments. "That is why the Department of Economic Development was established, so that we have a department to look at everything we do economically to ensure that every element talks to the other." Patel's department was also tasked with making sure economic growth resulted in the reduction of poverty, Zuma said. The Congress of South African Trade Unions had complained that a green paper on the National Planning Commission would give the commission's head, Minister in the Presidency Trevor Manuel, more power than Patel in the implementation of economic policy. Zuma also elaborated on the roles of Manuel and Finance Minister Pravin Gordhan. "The minister in the Presidency responsible for the National Planning Commission deals with the national plan ... the plan of the country so that the work of different departments ... in provinces, in municipalities, talks to this overarching plan. "That's a critical point. It is not an economic ministry that people make it out to be ... there should be no confusion." Zuma said Gordhan's job was to deal with finances; he was not a leader in setting economic policy. "If you talk about Treasury, their focus is finances. That is what they will look at. If that department was leading (in setting economic policy) you will then end up with an economy that is finance-orientated." He said Labour Minister Membathisi Mdladlana 's statement that labour brokers would be banned was his own opinion and not that of the ruling party. "He was not articulating ANC policy." Zuma said an ANC resolution adopted in Polokwane in 2007 called for the regulation of labour brokers, not their abolition. He defended the right of the alliance to influence the ANC, saying real discussions on economic policy took place in the alliance. ANC and Allies 'Reviewing' Reserve Bank's Role The African National Congress (ANC) and its alliance partners November 15 signalled possible far-reaching changes to monetary policy under President Jacob Zuma. They said after a weekend summit that an alliance task team " would remain seized with reviewing and broadening the mandate of the Reserve Bank". The resolution formed part of a series of trade-offs among alliance partners at the three-day summit in Johannesburg. Describing the summit as "one of the most important gatherings" where deliberations were "complex, tough and exhausting", alliance leaders stressed robust debate and policy differences would continue to be a feature of relations in future. There was no "softly-softly" approach to the policy disagreements that have led to public rows over who controls economic policy and where control in the Cabinet rests. The gathering saw the ANC placating its leftist allies on macroeconomic and industrial policy while extracting concessions from the Congress of South African Trade Unions (Cosatu) on the proposed National Planning Commission (NPC) and the role of public-sector unions in providing quality education. Announcing decisions after the talks between the ANC, its leftist allies and civic movement Sanco, ANC secretary-general Gwede Mantashe told reporters the global economic crisis had forced a rethink of policy options. In a statement, the allies agreed there was a need to link SA's short-term counter-cyclical response to the long-term objectives of transforming the structure of the economy and moving to a different growth path. "In view of the current circumstances, we can't just say the policy is right. The primary issue is employment creation," Mantashe said. The concession comes after the labour federation and the South African Communist Party led a vocal campaign for changes in macroeconomic policy and the mandate of the Reserve Bank. On a ramped-up industrial policy, long a Cosatu bugbear, Mantashe said the allies agreed the scale and scope of industrial policy had to be increased, and funding increased "commensurately". Asked if the summit discussed rand strength after Economic Development Minister Ebrahim Patel's pronouncements, Mantashe said: "We need to look at all aspects of monetary policy. It must talk to the developmental considerations, so we won't just isolate the issue of the strong rand. "We need to look at the exchange rate and how the issue impacts on the current account deficit," Mantashe said. But the ANC stuck to its guns in winning agreement on Minister in the Presidency Trevor Manuel chairing the controversial NPC, which will consist of external experts and not co-chairs of cluster ministers as suggested by alliance leaders. "In particular we agreed that there is a need for the NPC located in the Presidency, which will be chaired by the minister in the presidency for the NPC and whose main responsibility will be to ensure integrated strategic planning across government," Mantashe said. He said the NPC matter had been resolved. "That debate is settled now," Mantashe said. Cosatu president Sdumo Dlamini, who flanked Mantashe, played down the federation's earlier objections to Manuel, whom it accused of wanting to be a de facto prime minister. "There are issues that still remain which need to be nuanced and worked on, excluding the issue of the chairing, which we have settled," Dlamini said. Leave Currency to Markets – Marcus Reserve Bank governor Gill Marcus has nailed her colours firmly to the mast of non-intervention in the currency market and refraining from support to keep the rand at a particular level. However, she diplomatically said November 19 that the issue of what could be done to weaken the currency and to change the mandate of the central bank was still open to debate. Markets should determine the exchange rate, Marcus insisted during her first meeting with Parliament's finance committees. "It is not the Bank's task or desire to intervene to find a rate we feel comfortable with. We do not do that, and we will not do that," Marcus said. The governor assumed office November 10 in an atmosphere fraught with contest over monetary policy and the role of the Bank and amid concern over the effect of the strong rand. The currency has strengthened about 25% against the dollar this year and several Cabinet members have expressed their concern - including Trade and Industry Minister Rob Davies, who called for urgent action to staunch the damage. Economic Development Minister Ebrahim Patel announced earlier in November that he would hold discussions with business and labour on the rand and possible measures to weaken it. The Congress of South African Trade Unions (Cosatu) wants a much weaker rand and interest rates to be cut immediately to stem speculative capital inflows. A summit of the tripartite alliance of the African National Congress, Cosatu and the South African Communist Party decided the mandate of the Bank should be reviewed and broadened from its current focus on inflation targeting. But Marcus insisted during the parliamentary briefing that the exchange rate was established by market forces. She warned that if one wanted to intervene in the market to achieve a particular level for the currency "people will take you on". There was no perfect rate and markets determined it. The Bank's activity in the market was limited to building up foreign exchange reserves, she explained. Later Marcus told reporters global events were a determining factor in the value of the rand. "It depends on what is happening in the globe. This is not so much a function simply of the rand but of the dollar. You have a very weak dollar ... it is something the world is facing. "We have major global imbalances at the moment in terms of where money is moving." Treasury's R1,5 Billion Lifeline for SABC Hailed The Treasury has extended a helping hand to the struggling SABC, approving its application for a government bank guarantee of R1,47bn. This is despite Finance Minister Pravin Gordhan's insistence recently that he would take a tough stance on the bail-out of state-owned enterprises. The guarantee would also add to the government's already onerous debt burden. But opposition parties and the Save Our SABC Coalition welcomed the move, saying the government had no option but to support the national broadcaster. The guarantee would allow it to settle debts and start afresh under its new board. The guarantee will be released in tranches, with a draw-down of R1bn made available immediately and the remaining R473m released on the SABC's submission of a detailed project plan committing it to explicit revenue targets and cost-cutting measures. This would enable the government to oversee and monitor how the money is spent. Making the announcement November 24, Communications Minister Siphiwe Nyanda said his department would ensure that the money was used properly, including to settle urgent outstanding financial obligations. Tight control measures had been introduced, including regular management reports. Nyanda believes the guarantee "will go a long way towards stabilising the public broadcaster after a very tumultuous period marked by anxiety and uncertainty among staff in particular and the public in general". "We hope that the financial injection by the government will help the SABC meet its urgent needs such as payment of outstanding debts and other matters of priority," he said. The guarantee comes shortly after the emphatic statement in Parliament by Gordhan that "bail-outs are not going to be an endless mechanism of funding either foolishness, mismanagement, poor judgement, poor strategic leadership or no leadership at all. "We are absolutely clear about that. We have imposed tough terms on state owned enterprises that require state assistance. Those terms mean that this assistance is not an endless process. It has a very finite purpose, and we expect finite things to be done. "We expect the right things to happen within state-owned enterprises, otherwise state-owned enterprises themselves must review the purpose for their existence." SABC interim board chairperson Irene Charnley welcomed the guarantee, saying the SABC could begin the turnaround needed to develop a viable public broadcaster. "The SABC incurred a loss of over R900m at the end of March this year and the application by the corporation is aimed at both paying back creditors and implementing a turnaround strategy." The interim board had started to identify cost-cutting measures and put in place governance systems to guard against wasteful spending. A senior SABC board member, involved in drawing up the budget submitted to the Treasury, said it was a "fairly straight line expenditure project with some level of saving and of restructuring. The projections were done over two years and were fairly conservative. "Revenue might grow faster than projected and expenditure could be cut so the SABC might not need to make use of all the money." Save Our SABC Coalition spokeswoman Kate Skinner said she hoped the guarantee and the promise of greater monitoring by Nyanda would not mean too much interference in the workings of the new board. Note: To read more, click here

Comments

Predictions about South Africa
by Yorick Blumenfeld on 16.01.08, 18:14

I truly admired the entertaining and informative approach of your predictions till I came to the very end. The problems facing South Africa under the leadership of Mbeki have been dire. Mbeki's approach to AIDS, endemic violence in SA, Robert Mugabe ( and Zimbabwe's refugees in SA)and his continued denigration of Zuma have all been equally deplorable. But because Mbeki is President of the leading African democracy, the media have kept quiet about this thoroughly reprehensible figure. I have no inside knowledge about Zuma, his allegedly corrupt arms deals or his purportedly scandalous personal life. What I do know is that Mbeki has steadfastly tried to block Zuma's path to power and that in itself may be the reason that the ANC has voted for Zuma. Maybe in 2008 Mbeki will finally be exposed for what he is : a disaster !

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