South Africa

PRETORIA – "Significant achievements" have been made in implementing delivery agreements between ministers and President Jacob Zuma, Cabinet spokesperson Jimmy Manyi says. These included progress in education, improvements in municipal audits and justice, according to an executive summary of the government's 12 desired outcomes, distributed after Cabinet's regular fortnightly Wednesday meeting. According to the summary on education, achievements include finalisation of the teacher development plan, standard workbooks in literacy and numeracy aimed at Grade 1 to 6 pupils, and the roll out of annual national assessments. However, provinces seem to have difficulties "absorbing" graduate teachers. The development and distribution of workbooks and textbooks has "significantly improved", but a number of schools still do not receive materials on time. In higher education, universities will not meet their graduate targets in areas such as engineering, natural and physical science and animal and human health. There is inadequate reporting on new bursary schemes for increasing the number of engineering and accounting graduates. The number of police officers has increased, and more regional and district courts established. It, however, still takes too long to finalise cases due to lack of staff and money. In the economy, problems exist with encouraging people to save money, addressing the strength and volatility of the rand, and the price of iron-ore and steel. Concerns exist around low levels of investment, including by the public sector, and inflationary administered price increases.

JOHANNESBURG – South African monetary policy may remain favourable to the economy and inflation expectations are still "anchored well within" the central bank's target range, chief economist Monde Mnyande says. "I think there is a possibility of monetary policy remaining, together with other things, favourable to the South African economy. That is the answer," he says. Annual headline inflation quickened to 4.6% in May from 4.2% in April, coming in above market expectations but well within the Reserve Bank's 3% to 6% target band. "If you want to know the answer of the MPC (Monetary Policy Committee) coming forward, definitely the inflation expectations remain anchored well within the target range," Mnyande says at a presentation on long-term monetary policy. However, the bank expects inflation to briefly breach the target to peak at 6.3% in the first quarter of 2012, mainly due to higher oil, food prices and administered prices. It has kept the repo rate steady at 5.5% at its previous three policy setting meetings this year, after a 650 basis point cutting cycle in the two years to December 2010. Analysts expect the bank to hike rates but are divided on the timing. Some see a rise in the fourth quarter of this year while others see the MPC holding off until next year. Mnyande says that the central bank will not raise rates only on the back of higher oil and food prices, taking into consideration all prices in the consumer price index (CPI) basket. Inflation has stayed within the target since February 2010.

JOHANNESBURG – South Africa’s ruling African National Congress (ANC) distances itself from the strongest comments yet by its Youth League advocating nationalisation of the mining sector and seizure of land from white farmers. Julius Malema, who was re-elected leader of the Youth League, used his victory his speech to launch an assault on “white monopoly capital” in Africa’s biggest economy that includes the takeover of land without compensation. The firebrand 30-year-old has huge support among disenchanted young black South Africans and is seen as a king-maker in an ANC leadership race looming in 2012. However, the ANC stresses that Malema’s thoughts have nothing to do with central party policy. “Pronouncements by the Youth League on such matters as the nationalisation of mines and land redistribution – among others – form part of ongoing discussions within the movement,” it says in a statement. Malema’s rhetoric about nationalisation and seizure of white-owned farms has unsettled domestic and international investors, not least for its parallels with the disastrous policies of President Robert Mugabe in neighbouring Zimbabwe.

JOHANNESBURG – The leaking of a provisional report relating to complaints and allegations of maladministration, improper and unlawful conduct by the Department of Public Works and the South African Police Service with regard to a building lease in Durban is unlawful, Public Protector South Africa CEO Themba Mthethwa says. The findings of the report, ‘Against the Rules Too’, which are “highly critical” of police commissioner General Bheki Cele, Minister of Public Works Gwen Mahlangu-Nkabinde and businessperson Roux Shabangu”, were published in the Sunday Times. The findings, as published in the newspaper, point to “rentals inflated by up to 300%, with floor space in Durban of some R78-million added without justification,” among other key findings. It also includes allegations that the suspended Public Works director-general Siviwe Dongwana was forced to sign the lease agreements owing to pressure from Mahlangu-Nkabinde, who recently placed a moratorium on new tenders in an effort to “clean up the department”. Referring to the leak as “undermining justice, fairness and the integrity of investigations”, Mthethwa also says that he can not comment on the accuracy of the information published in the newspaper.

JOHANNESBURG – The South African Reserve Bank will not raise rates only because of higher oil and food prices, chief economist Monde Mnyande says. The bank has left the repo rate unchanged at 5.5% this year, after reducing it by 650 basis points between December 2008 and December 2010. The bank says it expects inflation to briefly breach the target range of between 3% and 6% and peak at 6.3% in the first quarter of 2012, mainly due to higher oil and food prices and administered prices. “The cost-push pressures are the ones that have made the Monetary Policy Committee not to move up on policy rates. We take into consideration all other prices in the basket and it wouldn’t be fair to look at one variable . . . That’s not how we do things. We will consider all factors that affect inflation,” Mnyande says. The next move in rates is expected to be up but the market is so far divided on whether the central bank will start tightening policy in the fourth quarter or early next year.

Africa & the world

CAIRO – Egypt's Muslim Brotherhood is exploring an alliance with 17 liberal and other parties that could lead to electoral cooperation, in an apparent move to allay liberal concerns about the Islamist group's goals. The Brotherhood, Egypt's most organised political force, is widely seen as best prepared for the September parliamentary election as many secular parties struggle to get ready for the first free vote since President Hosni Mubarak's overthrow. The Brotherhood, officially banned but semitolerated under Mubarak, says it will contest half of parliament's seats, seeking to capitalise on the grass roots networks it has nurtured during decades of medical, social and charity work. Activists, who put national pride before faith in the uprising against Mubarak, fear the Brotherhood will dominate politics and seek to impose strict Islamic rules on Egypt. A statement posted on the Brotherhood's website says that it has agreed with other parties "on ways that could lead to a joint election list to include representatives from all members of the alliance that would gain the trust of the Egyptian masses". Yassin Tageldin, deputy chairman of the liberal Wafd party, says that such an electoral deal could be struck if talk of a law forcing candidates to form lists materialised. Wafd, a party that dates from the early 20th century, was one of the few allowed to operate in Mubarak's time. Many requests to form parties were rejected by a committee that was led by the secretary-general of Mubarak's ruling party.

PARIS – G20 members were on the verge of signing an agreement over measures to curb volatility in staple food prices after late-night talks yielded progress in the first-ever farm meeting of the Group of 20 major economies. The final wording of the agreement is still to be decided by ministers at a last session, and sources close to the negotiations expect the deal to tread carefully on divisive issues like market regulation and biofuels. "It is agreed at the working level but ministers are ministers so they will still have a debate today," one source close to the talks says. A source close the French G20 presidency says the wording of the text is "still evolving at this very minute" and that ministers will have several versions to review on the key sticking point of market regulation. France is keen to crown agreement on areas such as data transparency and policy coordination with firm proposals for regulating commodity derivatives, but partners including Britain remain opposed to stringent controls on financial markets. French President Nicolas Sarkozy has urged G20 farm ministers to adopt France's proposed action plan, including a tough line on speculators, whom he blames for driving up food prices and fuelling political upheaval in some countries. "A market that is not regulated is not a market but a lottery where fortune favours the most cynical instead of rewarding work, investment and value creation," he says.

KHARTOUM – North and south Sudan have signed an agreement to demilitarise the disputed Abyei region and allow in Ethiopian peacekeeping forces, former South African President Thabo Mbeki says. South Sudan is due to break off into an independent country in less than three weeks and the question of who should control the fertile, oil-producing region has been one of the most contentious unresolved issues ahead of the split. Khartoum seized Abyei’s main town on May 21, causing tens of thousands of people to flee the area, triggering an international outcry and raising fears the two sides could return to open conflict. Representatives of the south’s dominant party, the Sudan People’s Liberation Movement (SPLM), and the Sudanese government have been meeting in the Ethiopian capital of Addis Ababa for more than a week in an attempt to hammer out a deal. “The SPLM and the Sudanese government have signed an agreement on Abyei,” says Mbeki.