July - 17 - 2011
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The possibility of a settlement in the ‘hate speech case’ against Julius Malema was raised during his cross-examination in the High Court in Johannesburg April 21. “If the spirit is the same here certain things… will die a natural death because we appreciate one another. And it doesn’t need a court order,” said the ANC Youth League president. Afrikaner interest group AfriForum and farmer representatives TAU-SA have taken Malema to the Equality Court over his singing of the lyrics “idhubhula ibhuna”, which translate from isiZulu to ”shoot the boer”. Malema has said he did not recognise the translation from isiZulu as “shoot the boer”. He said that the two parties had moved closer. “We are coming very close to each other.” Malema was led through questioning on whether he was open to dialogue to solve the matter, which has also sparked a national debate. AfriForum deputy CEO and youth movement leader Ernst Roets has explained that he and the group’s supporters find the lyrics threatening, particularly to minorities and with his understanding of the translation of the word “ibhunu”, it poses a threat to the safety of Afrikaners and farmers. Malema, who was trained to carry and use a gun by the age of 13, was adamant that this was not the case, adding that the isiZulu word for farmer was “umlimi”. He also denied a submission by Du Plessis that the lyrics were part of a greater plan to remove white farmers from their land. Asked whether the ANC Youth League was used by the ANC to get issues like nationalisation of mines going, Malema said that the league had a history of being a radical movement that made older members examine the possibilities of what they suggested. Former president Nelson Mandela had done this and it was not because he was being used by the ANC, but because he believed in what he said.

Zimbabwe President Robert Mugabe distanced himself April 6 from state media’s blistering comments on South African President Jacob Zuma, in a bid to end a diplomatic spat between the neighbours. The Zimbabwe government mouthpiece “Sunday Mail” published an editorial calling Zuma “erratic” and “disaster-prone”, and had criticised his tough stance on Zimbabwe and his support for the no-fly zone in Libya. “A lot of dire reading has been made out of this week’s “Sunday Mail” editorial comment and an opinion piece it carried on the same matter,” Mugabe’s spokesman George Charamba said in full-page statement printed in the state-run “Herald” newspaper. “The opinion of the Sunday Mail has been conflated with the opinion of the government of Zimbabwe,” he said. Mugabe himself lashed out April 1 at the 15-nation Southern African Development Community, after Zuma and other leaders at a security summit slapped him on the wrist over escalating political violence ahead of elections expected later this year. “We are a sovereign country. Even our neighbours cannot dictate to us. We will resist that,” Mugabe said. The Sunday Mail went further, with a personal assault on Zuma. The paper described him as a “liability, not only to South Africa, but also to the rest of the continent”.

South Africa attended its first BRIC (Brazil, Russian Federation, India, China)summit April 14. Its entry into the BRIC bloc as a full member should boost investment and trade opportunities for the country, as it has done for the other four states comprising the informal grouping. BRIC had a combined GDP of R18 trillion late in December, and will account for 61 percent of global growth in three years time, according to the International Monetary Fund. South Africa’s inclusion in the BRIC group of powerful emerging economies has sparked intense debate, with some saying it has done itself a disservice by trying to punch above its weight, and others lauding the inclusion as a step towards becoming a more important player on the global stage. South Africa was formally invited to join Brazil, Russia, India and China as a full member of the group in late December. Significantly, but unsurprisingly, the invitation came from China, which has become the country’s largest trading partner. South Africa doggedly lobbied the BRIC Forum in a bid to become a full member. But there has been criticism from some analysts and commentators, particularly as they say South Africa, as a far smaller economy than the other four, will be treated as very much the junior partner.

Back in March, convicted former aide of South Africa’s President Jacob Zuma was arrested while out on medical parole. Schabir Shaik, a former financial advisor, was picked up at his Durban home after allegedly attacking a fellow Muslim outside a mosque March 11. It comes after separate allegations by a journalist, who claimed she was slapped by the controversial businessman on a golf course. Shaik’s corruption charges nearly cost the president his political career. In 2005, Shaik was sentenced to 15 years for fraud and corruption, including the soliciting of a bribe from an arms company and covering up Mr Zuma’s unpaid debts. Two years ago, his release on medical parole sparked controversy because of his high level political connections. Out on parole after serving less than two-and-a-half years of his 15-year-term, one of South Africa’s most notorious criminals is back in custody. Shaik was returned to prison after the two separate reports alleged he physically attacked members of the public. Schabir Shaik, whose brother heads up South Africa’s intelligence services, was formerly Jacob Zuma’s financial advisor. After Shaik’s high profile trial, Mr Zuma stepped down as deputy president but he never faced trial himself, and returned to secure victory as South Africa’s president in 2009, shortly after which Shaik was released on parole.

South Africa has halted plans by the oil firm Shell to extract natural gas from the Karoo desert by using a method known as “fracking”. The process involves pumping pressurised water, sand and chemicals into the ground to extract the gas. The cabinet decided to stop the development until the ecological consequences have been studied. Experts had warned it could put an end to South Africa’s bid to host the world’s biggest radio telescope. The Square Kilometre Array telescope, a multi-million dollar project which could begin construction in 2016, requires an absence of radio interference, which the fracking may cause. Several government departments will lead the research into whether the semi-arid Karoo region could be damaged by fracking. “Cabinet has made it very clear that clean environment together with all the ecological aspects will not be compromised,” said a government spokesperson.

Zuma Says Meeting With Gaddafi Was ‘Huge Success’
A 5 strong African Union committee including President Jacob Zuma met with Moammar Gaddafi April 10 to broker peace talks. President Zuma was not present April 11 when the remaining AU leaders travelled to meet rebel leaders. Spokesman Zizi Kodwa said that Zuma did not attend the meeting with the rebels as he was preparing for a trip to China on April 12. President Zuma said the meeting in Tripoli was a “huge success.” The AU panel is “very happy with the outcome” of the talks, Zuma said. “Only an inclusive dialogue among the Libyan parties” will ensure a solution to the political crisis, Zuma said. The AU has called for an immediate cease-fire, the opening of channels for humanitarian aid and talks between the rebels and the government. The AU says that Gaddafi endorsed efforts, “including the deployment of an effective and credible monitoring mechanism”.

Zuma said that Gaddafi had accepted the AU peace plan designed to end the current conflict. “We also in this communique are making a call on NATO to cease the bombings to allow and to give a cease-fire a chance,” Zuma stressed. President Zuma was greeted by pro-Gaddafi supporters in Tripoli carrying banners reading “No to Foreign Intervention,” It said Gaddafi has ignored the cease-fire he announced after international airstrikes were authorised, and he rejects rebel demands that he step down.

Despite the AU diplomatic initiative, heavy shelling from troops loyal to the Libyan leader continued on the western fringe of rebel-held Ajdabiya.

Residents there voiced scepticism as to whether the AU mission could put an end to the conflict. “Gaddafi has forced us to go to war for our freedom,” said Boubacar Afmen Al Beybani, who fled Ajdabiya for Benghazi two weeks ago.

“In the beginning, Eastern Libya was open to peaceful negotiations, but now it is too late. We will fight until he goes,” he said.

Mugabe’s Poor Health Dominates SADC Summit Talk
Robert Mugabe arrived at the recent SADC Troika Summit in Livingstone, Zambia with an entourage of over 60 people. For onlookers at the Zambezi Sun Hotel, where Mugabe was staying, there was no doubting the fact that his health is failing – hence the massive security and medical team around him. On arrival at the hotel Mugabe, who was struggling to walk, was helped onto a golf cart which transported him to his room. His bodyguards and other aides followed behind. The same routine was repeated when the ZANU PF leader was leaving the hotel for lunch and the golf cart took him to his car. Various media reports contrasted Mugabe’s 60 plus entourage with that of South African President Jacob Zuma, who had less than 12 people around him, and Prime Minister Morgan Tsvangirai who travelled with six people. 4 cabinet ministers from ZANU PF are said to have also accompanied Mugabe, although their role at the Summit was not clear. Dewa Mavhinga, the regional co-ordinator with the Crisis in Zimbabwe Coalition, said he believes that Mugabe’s ‘physical condition’ gave the SADC Troika Summit ‘greater impetus to act while Mugabe is around or before it’s too late.’ Other commentators have made the same point, with some suggesting SADC leaders felt emboldened by Mugabe’s poor health to harden their stance on his violent crackdown back home. This year alone Mugabe has flown to Asia three times in three months seeking medical treatment. The official line is that he first went to Singapore in January to have an operation on an eye cataract. After he went back a third time to the same destination for treatment, it was suggested he had a much more serious problem than is being admitted. Mugabe’s office has continued to dismiss claims his trips are related to cancer of the prostate gland. He was also forced to deny other reports that he suffered a stroke last year. But those who saw Mugabe in Zambia said his legs were swollen and it was very clear he is far from well, so it suggests there is definitely something more than a cataract problem.

South Africa Launches State-Owned Mining Company
South African President Jacob Zuma has launched a state-owned mining company, called the African Exploration Mining and Finance Corporation (AEMFC). However the move is likely to cause concern amongst international investors, who may view it as a step towards the nationalisation of South Africa’s mining industry. Mining is one of South Africa’s most important economic sectors. Mr Zuma said the body would bring all state mining interests into its remit. “The role of the state cannot merely be confined to that of a regulator. The state must actively participate in the mining industry to ensure that our national interest is protected and advanced,” Mr Zuma said. “Government policy on minerals and mining does not make provision for the nationalisation of mining assets, but it does not prevent the state from participating actively in mining, competing with other companies,” he said. Recently South African mining minister Susan Shabangu moved to reassure investors when she said the nationalisation of mines was “not the option.” However there has been a debate within the ruling African National Congress party as to whether the country’s mining industry should be fully nationalised. The South African Communist Party also supports the nationalisation of mining. “What is worrying for mining investors is, where does it go from here?” said Alison Turner, an analyst with Panmure Gordon. “Is this just a small step to a much broader transfer… to state ownership?” she added. South Africa is a leading producer of precious metals such as gold and platinum as well as a major supplier of coal.

Zuma: will take time to recover lost jobs
South Africa’s economy has started to show positive signs of recovery but it will take time to recover from the job losses of a recession in 2009, President Jacob Zuma said April 19. Zuma’s administration has vowed to tackle unemployment which stands at about a quarter of the 17 million-strong labour force. Rampant unemployment has kept many blacks in poverty 16 years after the end of apartheid. There has been an increasing number of protests in townships across the country as many poor South Africans demand better living conditions and basic services like water and electricity from the government. South Africans will vote in local government elections in May, and the ruling African National Congress is widely expected to retain control of many municipalities, despite dissatisfaction over jobs. South Africa lost more than a million jobs during its recession in 2009, the first since 1992. “The employment numbers have recently turned positive and the economic forecasts are also positive, both for higher economic growth and for employment creation,” Zuma said in a speech at a labour summit with unions. “Nevertheless, it is likely to take longer for us to recover from the job losses of the 2009 recession and to make a real dent in the 24 percent unemployment rate that characterises the labour market.” In February’s budget, Finance Minister Pravin Gordhan allocated about 20 billion rand towards job-creation projects in line with the government’s aim to create about 5 million jobs by 2020. Zuma said achieving that target would mean reducing the unemployment rate to around 15 percent. Zuma rose to the ruling African National Congress’s top position with help from the unions, who wanted more leftist policies. He told the unions that the government was committed to addressing labour practises that rob workers of their rights. “We are now taking steps to implement the undertaking we made that we will address the problems of labour broking and regulate out-sourcing and contract work,” Some proposed labour regulations, which include increasing benefits to contract workers, have unsettled investors who say the country’s labour laws are already restrictive, making it difficult to hire and fire.

Nation Sets to Eradicate Child Labour in Five Years
The Department of Labour has vowed to eliminate the worst forms of child labour in the next five years. Labour Minister Nelisiwe Oliphant made the announcement as she addressed hundreds of people who gathered for the National Child Labour Day commemorations in Stellenbosch April 4. Oliphant spoke against the backdrop of her department’s continued drive against child labour, which is backed by various conventions of the International Labour Organisation (ILO). She said South Africa had “progressed considerably” towards the development of a framework to help fight child labour. “Our labour legislation provides the basis for this fight when it outlawed child labour, while it permits certain categories and gives regulations under which this work can be performed. “The newly-promulgated Child Justice Act provides innovative ways in dealing with children who have been involved either in offences where they were used by adults to commit crime or in commercial sexual exploitation,” said the minister. Oliphant said with the help of the ILO’s time-bound programme towards the elimination of the worst forms of child labour, the department ventured into areas “that may not necessarily be labour-related but with a specific focus on poverty alleviation.” The minister acknowledged the role of social partners, including organised agriculture, in fighting the scourge of child labour. Agriculture, according to the Department of Labour, is the largest sector with child labour practices, where most children worked as unpaid family members. She said it was important to allow children to remain children. “This means allowing them to be at school and to play as part of their development.” According to the Basic Conditions of Employment Act, it is a criminal offence to employ a child younger than 15 years, except in the performing arts with a permit from the department. A child aged 15 to 18 may not be employed to do work inappropriate for their age, or work that places them at risk. The Act further states that any work performed by a child should not be exploitative, hazardous or otherwise inappropriate for the child’s age; detrimental to the child’s schooling or to the child’s social, physical, mental, spiritual or moral development

Economic Growth Climbs to 4.4% on Manufacturing Expansion
South Africa’s economic growth accelerated in the fourth quarter as manufacturing rebounded following the end of a strike by auto workers and interest rates at a 30-year low spurred consumer spending. Gross domestic product expanded an annualised 4.4 percent from the third quarter, when it grew a revised 2.7 percent, the statistics office said in a report released in Pretoria February 22. The median estimate of 21 economists surveyed by Bloomberg was for growth of 4.2 percent. Manufacturing, which accounts for 15 percent of the economy, returned to growth in the final three months of last year as carmakers boosted output after strikes disrupted production in August and September. The Reserve Bank cut its benchmark interest rate three times to 5.5 percent last year to support consumer spending in Africa’s biggest economy. “Improving consumption expenditure has supported the strong growth in retail and vehicle sales,” Kgotso Radira, an economist at Investec Ltd. in Johannesburg, said. “Going forward, growth in exporting sectors, such as mining and manufacturing, will depend on the pace of global growth and the rand exchange rate.” The growth rate is still short of the 7 percent the government says it needs in order to create 5 million jobs by 2020 and slash the unemployment rate to 15 percent. South Africa’s jobless rate of 24 percent is the highest of 61 countries tracked by Bloomberg. “The South African recovery has been relatively hesitant,” central bank Governor Gill Marcus said on Feb. 4. “However, recent indicators are more positive and suggest that the recovery will be sustained, and we can look forward to more vibrant growth in the coming years. But significant challenges remain.” The bank expects growth to average 3.4 percent in 2011 and 3.6 percent in 2012.

Union Sets Wage Bar Way Above Inflation
South Africa’s power, iron and steel workers want a 20 percent wage hike this year, suggesting unions will use high world oil and food prices to push for settlements way above inflation. In one of the first salvoes of the wage-negotiating season, the National Union of Metal Workers of South Africa (NUMSA) said April 7 it would strike if it did not get an increase of more than five times the current 3.7 percent inflation rate. “We will have to take industrial action because in this country there is no comprehensive social security net,” union Secretary General Irvin Jim told Reuters after the group’s annual wage-bargaining conference. Although the final deal will be far below 20 percent, such posturing is likely to stoke concerns about a ballooning state wage bill in Africa’s biggest economy and more problems for the government in cutting its budget deficit to below 5 percent of gross domestic product (GDP). The bulk of NUMSA’s 200,000 workers are employed in vehicle manufacturing, while 6,000 are employed by the state, via state power utility Eskom. Workers who comprise the bulk of Eskom workforce won a 9 percent wage increase last year after threatening a strike that could have cut electricity during the 2010 soccer World Cup. “Last year unit labour costs in South Africa increased by 10 percent. Labour productivity increased by about three percent, while we lost nearly a million jobs in the past two years,” said Dawie Roodt, chief economist at the Efficient Group. “These guys are asking for a 20 percent increase. Do the sums — they don’t add up.” Eskom, which employs 6,000 NUMSA members, could not immediately be reached for comment on the wage demands. Other companies likely to be affected by the NUMSA wage demands are Kumba Iron ore and steel-maker ArcelorMittal South Africa. “We think that the 20 percent is justifiable if you look at the levels of indebtedness of our members who are directly affected,” the union said. NUMSA, which represents more than 200,000 workers in the auto, steel, engineering and energy sectors, is also demanding an extra 15 percent morning day shift allowance and 20 percent night shift allowance in the metals engineering sector. South Africa’s main public sector union has already rejected an initial 4.8 percent wage offer from the government, and other unions are expected to start negotiating pay packages in the next couple of months.

Zuma Signs Companies Amendment Act Into Law
President Jacob Zuma has signed the Companies Amendment Act of 2010 into law and it will come into effect May 1 2011. The Companies Regulations and all other relevant documents will be published and also come into force on 1 May. “The new Companies Act is a major piece of legislation and reform, which has a number of features to it [and] will certainly improve the environment for business operation in South Africa,” said Trade and Industry Minister Rob Davies. According to Davies, business as a whole will reap the benefits of the Act. “There is a reduction, particularly on the regulatory burden on small medium micro enterprises. The requirement for financial reporting for small companies has been reduced considerably, in that they do not have to produce audited financial statements, but will need to have financial reporting at an appropriate low level,” Davies said. The major innovation is the introduction of a business rescue scheme, which means that instead of companies going into major judicial management as they do now – which is almost invariably a route to an eventual bankruptcy – a rescue process will be initiated. “Creditors can be held at bay while stakeholders work to rescue the company, which is a major and very important innovation,” Davies said. The signing of the Companies Amendment Act implies that the Companies and Intellectual Property Commission (CIPC), which was launched by the minister, will be open for business as of May 1 2011. The new Act does not allow registration of Close Corporations (CCs), and therefore none will be registered when the Act comes into legal force. However, CCs that are already in the system will remain active indefinitely, unless they choose to convert into the new corporate regime of the Companies Act of 2008. “The Act does not apply retrospectively and those registrants/people who have already applied for CCs before May 2011 will still receive their certificates,” Davies said. The commission will ensure that the regulatory framework for enterprises promotes growth, employment, innovation, stability, good governance, confidence and international competitiveness. The Act also gives the commission powers to investigate companies and to ensure that they comply with the legislation. This includes seizing documents and addressing the burning issue of corporate identity hijacking

Business Confidence Rises in March
The March Business Confidence Index (BCI) rose to its highest level since September at 88.3 points, the South African Chamber of Commerce and Industry (SACCI) said April 5. “The BCI is 5.1 index points higher than a year ago and is at its highest level since September 2008 when the BCI stood at 89.9,” said SACCI. Only two of the seven real economic activity sub-indices were positive (retail trade and building activity). “The financial environment remained conducive to a positive business climate in the short-term. Threats to the positive outlook in the financial environment include new risks in the global economic environment, commodity price movements and geo-political instability.” Though the BCI improved on a year-to-year basis in March, South Africa’s performance in the international trade environment could constrain improvements in business confidence if global competitiveness concerns are not addressed actively. The contributions of the sub-indices on an annualised basis were evenly balanced as six sub-indices were positive and six were negative, while one remained undecided. “Uncertainty gripped the world economy and stock markets and currency markets reacted nervously to the earthquake in Japan on 11 March 2011. Following the initial concern about the impact of the crisis in the world’s third largest economy, the consensus appears to be that the longer-term consequences of the disaster for the world economy will be relatively muted,” explained SACCI. It said that the Japanese economy will take some time to recover as infrastructure repairs take place. The pace at which the damaged rail and road networks are repaired and at which corporate operations are restored will determine the pace of the Japanese recovery. Additionally, the political turmoil in the Middle East and North Africa, which encompassed a greater number of countries during March 2011, “is of greater immediate concern given the current and potential impact on the crude oil price and the consequences for global inflation,” said SACCI. “The domestic economy appears to have regained some momentum in business confidence, but the index remains sensitive to domestic socio-economic developments. The conduct of the local government elections, the decisiveness with which corruption is dealt with and the level of labour dispute activity will be key determinants of whether the BCI breaches the significant level of 90.”

Inflation Rises to 4.1 Percent in March
The Consumer Price Index (CPI) rose to 4.1 percent in March – well above market expectations. Statistics South Africa (Stats SA) April 19 released the data showing that CPI was higher in March compared to February’s 3.7 percent. Nedbank economist Carmen Altenkirch said: “Consumer inflation accelerated in March, rising well above market expectations. Higher food and petrol prices as well as housing costs were mainly responsible for the 1.2 percent month-on-month rise. The annual increase in education costs, which is surveyed in March, also contributed towards the month-on-month increase.” In March, the food and non-alcoholic beverages index increased by 1.2 percent while the alcoholic beverages and tobacco index increased by 3.7 percent between February and March. The clothing and footwear index as well as housing and utilities index and the education index also increased. In the next few months, higher foods and fuel prices are likely to be the dominant factors. “The rand has held up better than anticipated and further rand strength will contain the impact of rising global commodity prices on inflation,” said Nedbank, adding that upside risks could stem from a sharper than expected depreciation of the rand, high global food prices, further oil price increases as well as high global food prices. “The upside to our interest rate forecast has increased over the past month, given the persistent surge in food, oil and other commodity prices. The Reserve Bank may opt to react pre-emptively, hiking rates in the second half of the year. However, we believe that this would do little to contain inflation and risks curbing the economic recovery. As a result, the Reserve Bank is only forecast to raise interest rates in January 2012,” said the bank. In March, the central bank at its kept rates unchanged at 5.5 percent.

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