South Africa

JOHANNESBURG – The South African Reserve Bank will not hesitate to take timely action to ensure "second-round" inflation does not bed down in the economy, Deputy Governor Daniel Mminele says. He also says that the domestic inflation outlook has deteriorated in the past couple of months, but says the recent decline in oil prices and the appreciation of the rand currency have, to some extent, alleviated price pressures. The Reserve Bank's Monetary Policy Committee has left its repo rate unchanged at 5,5% at its three policy meetings this year, after slashing them by 650 basis points between December 2008 and December 2010 to help the struggling economy. Some analysts see rates going up towards the end of the year as consumer inflation drifts towards the upper end of the bank's 3% to 6% target band. "The MPC will not hesitate to take timeous action to make sure second-round inflation pressures do not take hold," Mmnele says in a presentation to the Association of Corporate Treasurers of Southern Africa. South Africa's inflation picture has to date been "somewhat benign" compared with that of other emerging markets and, at this stage, there are no discernable inflation pressures coming from the demand side of the economy, he adds. Mminele says there are tentative signs that the positive momentum in household consumption is levelling off and that high levels of indebtedness are likely to constrain consumers in the future.

JOHANNESBURG – South Africa is unlikely to impose local supply targets in its upcoming ruling on Wal-Mart's $2,4-billion bid for retailer Massmart because such demands could violate international trade rules. South Africa's Competition Tribunal is likely to decide by Monday on whether to allow the world's largest retailer to buy a 51% stake in Massmart, a deal both government and unions say will squeeze local suppliers and lead to job cuts. Wal-Mart, which relies on its global network to source goods at lower prices than competitors, says it will agree to conditions on job cuts but not local procurement. The deal is seen as a test case for major foreign investment in South Africa. Home to the continent's deepest capital markets, South Africa is also a country where unions hold enormous political influence. That influence, however, may not trump global trade agreements. "If Wal-Mart's entry into the South African market is denied, or if there is discrimination against Wal-Mart in any form or measure, South Africa will be violating its international commitments," says Paul Kruger, a researcher at the Trade Law Centre for Southern Africa. As a member of the World Trade Organisation (WTO) and signatory of the General Agreement on Tariffs and Trade, South Africa is not allowed to demand that a company will buy certain products from domestic sources as a condition for approval of an investment. A WTO official declined to comment, as did officials for South Africa's Competition Tribunal.

PRETORIA – A South African who could be in line to lead the International Monetary Fund (IMF) is joining calls for the West to relinquish its hold on the fund’s leadership. Trevor Manuel, who earned praise during his 1996 to 2009 tenure as South Africa’s Finance Minister, tells national TV that developing countries are playing an increasingly important role in the global economy, and that it is “fundamentally wrong” that “birthright is more important than ability” in choosing the IMF chief. A European has headed the institution since the first MD was named in 1946, a tradition developing countries are criticising. An American has traditionally held the top job at the IMF’s sister agency, the World Bank. “The old order has to pass,” Manuel says. His name has come up often as a possible successor to France’s Dominique Strauss-Kahn (pictured), who stepped down as IMF head because he faces charges in New York of sexual assault. Strauss-Kahn denies the charges. National TV reports that Manuel will not say whether he is seeking the IMF job. Mexico says it will nominate the head of its central bank to lead the IMF. South Africa and Australia – cochairs of an IMF reform committee of the Group of 20 leading rich and developing countries – say merit, not nationality, should be the main criterion in replacing Strauss-Kahn.

JOHANNESBURG – Employers in South Africa are struggling to fill key positions, with 14% indicating that they have difficulty in finding the right talent, Manpower South Africa’s latest annual talent survey shows. The 2011 survey shows that the hardest positions to fill are those of drivers, machine operators and finance staff. Last year, skilled trades and engineers were listed as the most difficult positions to fill but pressure on these sectors has since been relieved, with skilled trades falling to fifth position and engineers not even listed in the top ten positions anymore. Manpower South Africa MD Peter Winn says the fact that companies are citing a lack of skills or experience as a reason for talent shortages should be a wake-up call for organisations, the education sector, government and individuals. “It is imperative that these stakeholders work together to address the supply-demand imbalance in the labour market in a systematic, agile and sustainable way,” he adds. However, South Africa has shown progress in bridging the talent gap.

Africa & the world

PARIS – Christine Lagarde, whose candidacy for the top International Monetary Fund (IMF) job has been challenged by developing nations, says that they will be fairly represented at senior positions. "I would want to remedy the situation," Lagarde says during a Financial Times (FT) interview, after announcing on Wednesday that she is officially in the running for the post,. "We need appropriate representation of high-level staff based on merit from various nationalities and academic backgrounds." The post of IMF managing director is up for grabs since Frenchman Dominique Strauss-Kahn, arrested on May 14 on charges of attempting to rape a New York hotel maid, quit. He denies the charges and has vowed to fight to clear his name. Brazil, Russia, India, China and South Africa have criticised European Union officials for suggesting the next IMF head must be a European, a convention that dates to the founding of the global lender at the end of World War Two, but have not so far rallied behind a particular candidate. "I don't think I should represent any particular constituency or region," Lagarde says, who is widely considered to be the frontrunner for the post. "I should serve the whole institution." She adds: "I would certainly apply the principles that in my previous roles I applied to gender." The FT says that she is referring to her long practice of choosing a woman over a man in appointments if they are equally qualified. Officials in Paris say that Lagarde is planning a support-seeking tour that will take in some of the new, more reticent, powers such as Brazil and China.

PARIS – Group of Eight leaders are to approve billions of dollars in aid to new Arab democracies with a programme designed to foster change sweeping North Africa and the Middle East. Leaders are to wrap up their two-day summit in northern France by launching a partnership with the region that ties aid and development cash to progress on democracy and economic reforms by States that have thrown off autocratic rulers. Tunisia and Egypt face huge economic pressures following popular uprisings that toppled their long-serving authoritarian leaders. In a report to G8 leaders, the International Monetary Fund (IMF) says the external financing needs of oil-importing countries in the Middle East and North Africa will top $160-billion over the next three years. "The region needs to prepare for a fundamental transformation of its economic model," Masood Ahmed, in charge of Middle East and Africa at the IMF, told journalists on the sidelines of the G8 meeting in Deauville.
"This will be greatly facilitated if international players including the G8 can enter into strategic partnership with these countries . . . where incentives are linked to a social agenda." The IMF says it can provide around $35-billion to help stabilise countries' economies but the bulk of financing will need to come from the international community. The World Bank has unveiled $6-billion in new funding for Tunisia and Egypt, whose revolts have inspired popular uprisings in Yemen, Jordan, Morocco and Syria, and left Libyan leader Muammar Gaddafi fighting to stay in power. The funds include budget support as well as lending to shore up the private sector and encourage new investment.

KHARTOUM – The US has ruled out dropping North Sudan from a terrorism list, restoring a US ambassador and taking other steps to normalise relations if Khartoum continues to occupy the oil-producing region of Abyei. Sudan’s northern army has vowed to hold the territory it seized in the disputed region, defying a United Nations demand it withdraw, pushing the North and South closer to conflict as the South prepares to secede on July 9. Analysts fear that North-South fighting over Abyei could reignite civil war, a move that will plunge the nation back into chaos as the South splits away and could send refugees back across the borders to neighbouring African States. US special envoy for Sudan Princeton Lyman says the US has started the process of dropping the North from the State sponsors of terrorism list, is weighing naming a US ambassador to Khartoum after July 9 and has held talks with the World Bank about the North’s foreign debt. “These are all steps toward normalisation. If we don’t have a successful completion of the comprehensive peace agreement, if we don’t have Abyei being negotiated rather than occupied, it’ll be hard to move forward on those items because that’s part of the roadmap (toward normalising ties),” he says. “You can’t complete the roadmap if you can’t complete these conditions,” he adds.

ASTANA – The European Bank for Reconstruction and Development (EBRD) has agreed to begin the process of extending lending to the Middle East and North Africa, following a string of popular revolts in the Arab world. The bank will explore how to direct funds to Egypt, where President Hosni Mubarak was toppled in February, and other Arab States in the same way it supported former Communist countries after the fall of the Iron Curtain more than two decades ago. “We are witness to extraordinary times, and this calls for extraordinary measures,” EBRD EU alternate governor Vassili Lelakis says at the bank’s annual meeting in the Kazakh capital.