South Africa

JOHANNESBURG – South-South trade is growing fast, but barriers among developing countries are still up to seven times higher than those imposed by the developed world, a representative from the Organisation for Economic Cooperation and Development (OECD) says. Speaking at a Frontier Advisory seminar at the JSE, OECD Development Centre director Mario Pezzini says that South-South trade has experienced tremendous growth in recent years, with exports from developing countries now constituting 37% of global trade, of which about 50% is related to South-South trade. “The sharp increase in trade between developing countries, despite barriers remaining, just shows the increasing importance of these trading relationships. This leaves lots of opportunity to improve on the flow of trade; just imagine what gain would lie in the further reduction of trade barriers,” says Pezzini. Historically, developing countries focus on preferential access to developed markets, but Pezzini says that the global economy has dramatically changed over the past two decades with wealth shifting from the developed world to developing countries, necessitating a change in thinking and attitude when it came to trade. The situation was further exacerbated with the recent economic crisis, where developed economies experienced a recession, while some emerging economies continued showing double-digit growth figures.

JOHANNESBURG – As South Africa grapples with the proposed introduction of a carbon tax, consultancy firm Africa International Advisors (AIA) warns that carbon regulation, and in particular taxation, must not disadvantage South Africa economically, relative to other competing economies, given the country’s reliance on coal. AIA director Tim Hough suggests options that he says will reduce actual greenhouse gas emissions, rather that just generate another tax revenue stream for the National Treasury, which could potentially prejudice South Africa’s competitiveness and result in job losses. He warns stakeholders of unintended consequences as a result of imposing the current carbon tax proposals, and says that South Africa appears to be taking on an inordinate burden with respect to greenhouse-gas (GHG) emission reduction commitments. Hough’s suggestion is that Eskom be excluded from paying carbon tax on current emissions or primary energy, as these costs will merely be passed on to the consumer. However, the utility should accelerate the diversification of its generating fleet − as reflected in the second Integrated Resource Plan − with major technical and financial support from the developed nations. There should also be a more aggressive drive on energy efficiency, and industrial efficiency, through programmes such as solar water heaters supported by public−private partnerships on a large-scale. With regard to Sasol and other major emitters, Hough suggests a gradual tax increase on the last 30% to 40% of direct emissions at the margin, for example, not a tax on total emissions, but a tax designed to change behaviour at the margin.

JOHANNESBURG – The money set aside by government to create jobs will be “rigorously” monitored, President Jacob Zuma says. “The performance and monitoring department is going to look at what has happened; there is going to be rigorous monitoring as to what is being done by all of us towards creating jobs,” Zuma said, in his State of the Nation address. He announced the establishment of a jobs fund of R9- billion over the next three years to finance new job-creation initiatives. In addition, the Industrial Development Corporation will set aside R10-billion over the next five years for investment in economic activities with a high job-creation potential. He indicated that there would be R20-billion in tax breaks to promote investments, expansions and upgrades in the manufacturing sector. He said government would ensure that vacancies in various departments are filled. “We are not going to allow vacancies . . . they must be filled,” he said. He also urged the private sector to do its part by hiring graduates who lacked work experience. “How do you allow skilled people to swell the ranks of the unemployed when, in fact, you could find a way to deal with it,” Zuma said.

JOHANNESBURG – Infrastructure degradation, water inefficiency, backlogs in providing access to basic water services, wastage and problems such as acid mine drainage were exacerbating water scarcity in South Africa, and would pose binding constraints on the economy, said Nedbank chief economist Dennis Dykes. Speaking at the inaugural South African Water and Energy Forum, in Sandton, he said that pricing policies over the medium and long term would need to come into play, and would need to be reflected in integrated national plans. Business Leadership South Africa CEO Michael Spicer added that the pricing of water should reflect the cost of infrastructure required to deliver that resource. Trans Caledon Tunnel Authority business analyst Richard Holden said that, unless consumers paid the proper price for water, improvements in this sector would not be realised. “Losses are high. If you don’t pay for water, how do you expect to attract people to work in this industry?” he asked. South African Institute of Civil Engineering water division chairperson Chris Herold said that water demand management in South Africa “has been a dismal failure”.

JOHANNESBURG – Social and economic conditions in many Southern African countries resemble those prevailing in countries such as Egypt and Tunisia. But broad-based uprisings akin to those initiated in North Africa and the Middle East since the ‘Jasmine Revolution’, which unfolded in Tunisia during December and January, are unlikely in the territory during 2011, a leading risk consultancy argues. Nevertheless, Control Risks, which released the latest version of its yearly RiskMap, believes that violence and social instability are still likely in a number of countries across Africa, where more than 20 elections are due to take place this year.

Africa & the world

JERUSALEM – Israeli Prime Minister Benjamin Netanyahu says that, while he hoped Egypt's efforts to achieve democracy succeed, he has to "prepare for the worst" as well. Netanyahu reiterates hopes that that Egypt will stick by a 1979 peace treaty with Israel, as the new military rulers in Cairo said they would in a statement issued on Saturday. "No one knows what the future in Egypt will bring," he says. In an apparent reference to critics charging that Israel has shown too much fear yet too little enthusiasm for the changes taking place in Egypt, Netanyahu says that "if there's a difference between Israel and others . . . ( it's that) I cannot simply hope for the best, I must also prepare for the worst." He adds: "Part of that preparation is to alert the leaders and policymakers around the world of possible dangers that may lie ahead, not because I want those dangers to materialise. "I have no doubt that maintaining the peace, deepening the peace is an interest of Egypt. And I hope that this will accompany the Egyptian effort to achieve a free and democratic society as they pursue their reform," the Israeli leader says. "Ultimately, the people of Egypt are those who will decide their own fate, but Israel cannot profess a neutrality as to the outcome," he says.

KAMPALA – Uganda's long-serving President Yoweri Museveni has dismissed predictions that Egypt-inspired protests could erupt after elections on Friday and repeated threats to arrest the main opposition leader. Museveni, who has been in power for 25 years, is facing a fierce contest from Kizza Besigye, who says there is likely to be street "chaos" if the poll is not fair. Most analysts expect Museveni to win, though his share of the vote dwindled at each of the last three elections. The opposition alleged vote-rigging at each of the polls. "There can be no Egyptian-like revolution here," Museveni says ahead of polling day. "Someone taking power by extraconstitutional means? That one is out of the question. It will not happen." Besigye, who is facing former ally Museveni for the third time, said last month that a popular uprising in Uganda was "even more likely" than in either Egypt or Tunisia after what he says are years of corruption. He intends to release his own results tally from the 24 000 polling stations across the country and warns that, if they do not match the official figures, his supporters will protest. Besigye, 54, was Museveni's doctor when he led a five-year bush war against a military dictator.

TRIPOLI – Palestinian refugees should capitalise on the wave of popular revolts in the Middle East by massing peacefully on the borders of Israel until it gives in to their demands, Libyan leader Muammar Gaddafi says. Gaddafi is respected in many parts of the Arab world for his uncompromising criticism of Israel and Arab leaders who have dealings with the Jewish State, though some people in the region dismiss his initiatives as unrealistic. Giving his first major speech since a popular uprising in neighbouring Egypt forced President Hosni Mubarak to resign, an event which electrified the Arab world and prompted speculation that other Arab governments could also be toppled, Gaddafi said on State television: “Fleets of boats should take Palestinians . . . and wait by the Palestinian shores until the problem is resolved. This is a time of popular revolutions. We need to create a problem for the world. This is not a declaration of war. This is a call for peace.” In a speech given to mark the birthday of the Prophet Mohammed, a holy day in the Islamic calendar, he also said: “All Arab States which have relations with Israel are cowardly regimes.”