South Africa

JOHANNESBURG – South Africa's government is appealing a decision by its own regulators to allow Wal-Mart to buy control of local retailer Massmart, a move that could tarnish the nation's credentials as an investor-friendly emerging market. "We received an application from the three government departments yesterday but we haven't set a date to hear the matter," Tebogo Mputle, a court registrar at the Competition Appeal Court says, adding a date for the hearing could be sometime in October. The appeal was filed by three government departments that had opposed the deal: Economic Development, Trade and Industry and Forestry and Fisheries. Wal-Mart finalised its $2.4-billion purchase of 51% of discount retailer Massmart on June 20, after winning approval with minimal conditions from South Africa's Competition Tribunal. The government, unhappy with how the Tribunal conducted the hearing in May, wants the court to either set aside the Tribunal's decision or send the matter back to the Tribunal for further consideration. "The merger hearing was unfair and not in accordance with the principles of natural justice," the departments said in their appeal application. The appeal is likely to have little impact on the transaction, which was completed last month, but it sends a negative message to potential foreign investors. "The appeal shows no appreciation for foreign investment because the government has no substantive arguments on the merger itself. It all seems like they are not happy with the procedure," says Derek Lotter, a partner at law firm Bowman Gilfillan. "If the government does not want foreigners to invest in South Africa, they should articulate that as a clear policy." Wal-Mart's bid is seen as a test case for foreign investment in South Africa, which is home to both the continent's deepest capital markets and influential unions.

PRETORIA – South Africa will not be able to escape an escalated European crisis unscathed, Finance Minister Pravin Gordhan says, adding its direct economic exposure to the countries affected is reasonably low. "South Africa's direct economic exposure to those countries affected by current market turmoil is reasonably low," Gordhan says in an opinion piece published in the financial daily Business Day. "The greater risk for South Africa is the potential for contagion that results in a prolonged and expanding crisis in Europe and undermines global growth significantly." As a small, open economy, South Africa would be hit by troubles in Europe, Gordhan said, but the government had increased its foreign exchange reserves as protection against global shocks to the economy. "In an extreme crisis, the government is in a position to use these funds, although the liquidity implications of doing so would also have to be considered," he writes. South Africa fell into recession in 2009 as a sharp fall in global demand hit the key mining and manufacturing sectors.

JOHANNESBURG – The African National Congress (ANC) is considering establishing a State-owned pharmaceuticals company, secretary-general Gwede Mantashe says. “Serious discussions started at the lekgotla on starting a State pharmaceuticals company,” he says. “It’s not just an idea . . . [it has been] given back to Cabinet to say, ‘Look into the issue’. . . there was a compelling case for it,” Mantashe says. “Remember, a year ago, the establishment of a mining company was an idea. Today that mining company is operating a coal mine and is about to open a second coal mine. So, it was an idea. Everything starts with an idea and it becomes reality when work is done on it. Brazil’s State company is opening a branch in Mozambique. Now the question we are asking is: Why should we be a market for Brazil instead of being a market for ourselves?” South Africa consumes 25% of antiretrovirals available in the world. The lekgotla received a report on health, showing a dramatic increase in the number of people tested for HIV/Aids – increasing sixfold, from 2-million a year to 12-million a year. There has also been a “dramatic increase” in the number of people accessing treatment. The formation of a State-owned pharmaceuticals company does not spell doom for the private sector, says Mantashe. “There will still be a pharmaceuticals industry; there will be a State company operating in the sector – there is a need for that, in the same way that we are establishing a mining company but not closing the mining sector.”

PRETORIA – British Prime Minister David Cameron (pictured) has committed to doubling bilateral trade with South Africa by 2015, as he begins his first working visit to sub-Saharan Africa to bolster trade links with the continent. Speaking after a meeting with President Jacob Zuma at the Union Buildings, Cameron further pledged an additional £52-million aid package for refugees in Somalia, Kenya and Ethiopia. With trade between the two countries valued at around R60-billion, Cameron noted that engagements between Britain and South Africa are more critical than ever. He described the relationship between the two countries as “cordial and strong”, saying there is room to make it even stronger through increased trade and investment. “There is a huge opportunity for trade between Africa, South Africa and the UK . . . we are seeing a booming Africa and I want Britain to play a crucial role in that development. Our engagements are more important than ever before,” Cameron said. Zuma also noted that, while trade continued to grow between Britain and South Africa, there was room for improvement. Zuma said that, apart from trade matters, the discussion also centred on the leadership crisis in Libya and the political situation in Zimbabwe. Although the two countries agree a solution is needed to resolve the Libyan crisis, differences in the approach are present, with Cameron standing firm on British support for the North Atlantic Treaty Organisation air strikes, while Pretoria emphasises a more negotiated settlement.

Africa & the world

WASHINGTON – Hopes of rescuing a small trade deal from the ashes of the Doha round of global talks are likely to be dashed, several trade negotiators say. Attempts to clinch a deal on the 10-year-old Doha talks fell apart in April, prompting World Trade Organization chief Pascal Lamy to suggest member countries lower their sights and aim instead for a less ambitious trade liberalisation package. The idea is to shoot for a "mini-Doha" deal at a ministerial meeting in December, pulling together the less contentious pieces of the main negotiations and cementing them into a package that would be definite proof of progress. But there remains no agreement on what should be in it and, between them, the 153 WTO members have proposed including almost everything from the main talks, officials say. "From my perspective it does not appear to be coming together," David Shark, US deputy permanent representative to the WTO, told a conference at the Graduate Institute of Geneva. "It seems unlikely that we are going to have one by December, but it would be good if we could," agreed Chinese trade official Zhu Haitao, who said his comments are his personal views and not China's official position. "This would be the easiest thing we could do at the moment," said Zhu. "We would be telling the world that the Doha deal is still alive. There needs to be a process in parallel to discuss what we should do after December, which is not taking place at the moment." Some trade experts say Doha has foundered because of a lack of political will. Last week, former US trade representative Robert Zoellick tried to dispel the defeatism by saying the deal could be revived with a hefty shunt from Washington, where his unwanted advice got short shrift.

NEW YORK – Sustained growth in developing countries is keeping the world on track to reduce the global poverty rate to below 15% by 2015, the United Nations (UN) said at the launch of ‘The Millennium Development Goal Report 2011’. This is significantly below the 23% target prescribed in the Millennium Development Goal (MDG) framework. Despite the global financial crisis, which resulted in a decline in commodity prices, trade and investment, current trends suggest that the momentum of growth in the developing world remains strong enough to sustain the progress needed to reach the global poverty-reduction targets, the report states. The East Asia region is leading in efforts to reduce poverty, with China and India expected to decrease the number of people living in poverty by 320-millon by 2015, adding to the already 455-million people from 1990 to 2005. But the report does paint a mixed picture of progress and challenges globally, as echoed by UN secretary-general Ban Ki-moon. “Even where we have seen rapid growth, as in East Asia and other parts of the developing world, progress is not universal, nor are the benefits evenly shared. Stubbornly high unemployment persists in rich and poor countries alike. And, in many cases, the wealth gap is widening between the prosperous and the marginalised and between urban and rural, “ said Ban.