Monday, November 15, 2010

From Creamer Media in Johannesburg, I'm Amy Witherden.

Making headlines:

Economic power is leeching from the old world to emerging markets and the politics of globalisation are not keeping pace with this shift. This makes it hard to agree joint action to tackle urgent issues such as how to reduce China's external surplus. The Group of 20 (G20) summit in Seoul amply corroborated each of these truisms. The risk now is that, in the absence of policy coordination, a purely market-driven adjustment of global economic imbalances will be messier than it need be. Further, where market forces are not allowed to prevail, as is the case with China's exchange rate, the temptation for politicians in the US and Europe to try to force the adjustment through tariffs and import barriers can only grow.
Cornell University Professor and senior fellow at the Washington-based Brookings Institute Eswar Prasad says that "there is a pervasive sense that the G20 has reached the limit of cooperative efforts towards the rebalancing of the world economy." With advanced economies barely plodding along while emerging markets are enjoying red-hot growth, reconciling the different types of policies required has become difficult, he said. These conflicts were on show in Seoul.

Government is set to lift the moratorium on its Farm Equity Schemes, or FES, imposed in June last year, Rural Development and Land Reform Minister Gugile Nkwinti announced on Sunday.
The moratorium on the schemes, in which government has invested R500-million since their inception in 1996, "will be lifted in January [next year]", he said at a briefing following a workshop in Cape Town. "FES was a good policy, but it was badly implemented... we did not manage it well - both ourselves as government and the farmers," he said.
Nkwinti said that a further amount of R900-million, available in his department's current budget, is earmarked for getting FES back up and running. A similar amount - one quarter of baseline budget - would be made available in the next financial year.
A study last year found that of the approximately 100 schemes started up, only nine had paid dividends to their members, and one-half of these were reinvested in the venture. Nkwinti said that he planned to meet with white commercial farmers to discuss what mechanisms need to be put in place to ensure the future of FES.

With up to 17 African countries facing national elections next year, politics will loom large in the minds of investors, but the risk of prepoll fiscal blowouts may not be the big threat that many imagine. Ahead of the busiest African political calendar since the end of the Cold War, the International Monetary Fund (IMF) has analysed electoral cycles and government spending across the continent to see how they relate. After crunching the numbers from 150 elections in 44 African countries from 1988 to 2009, the surprising results are that, unlike many democracies elsewhere, African governments are not inclined to spend their way to re-election.
"Averaged across all countries and all elections, both government spending growth and fiscal balances tended to be fairly similar in all years of a typical election cycle," the IMF concluded. At one level, this points to the impotence of governments and central banks in guiding economies that are still highly geared to the vagaries of rain-fed farming or external demand for the hydrocarbons and other minerals they produce. But it also sheds light on the "quality" of African democracies, a thorny issue given that five decades after independence, many are run by a single party whose authority is rubber-stamped every five years by a cowed electorate. Similarly, the IMF found no link between economic and political cycles, even though most States have fixed term limits that increase the logic for elected governments to try to engineer a boom to coincide with a ballot. Ironically, the IMF found that the less "democratic" a State, the more likely it is to have an election-related spending cycle - backing the view that "strongmen" can get things done and more pluralistic regimes can be inept and messy.

Also making headlines:

The head of the United Nations mission in the Côte d'Ivoire approves the results of last month's first-round election, saying that any irregularities could not have affected the outcome.
The United Nations Security Council has finally received a report on violations of the arms embargo in Sudan's western Darfur region that infuriated Beijing.
Opposition leader Alpha Conde narrows the gap with Guinea Presidential frontrunner Cellou Dalein Diallo, according to a tally of partial results from a November 7 election.
And, Somalia replaces Iraq as the State most at risk from a terrorist attack, according to a ranking by global analysts Maplecroft, which sees threats also rising in Russia, Greece and Yemen, but falling in India and Algeria.

That's a roundup of news making headlines today.