South Africa

JOHANNESBURG – Rising inflation and the slowing pace of economic growth in emerging markets will cloud the outlook of these countries for years to come, the Business Report has quoted South African Reserve Bank Governor Gill Marcus as saying. In an article that focuses mainly on leadership, Marcus says the global economy is in the middle of a "synchronised downturn", especially in developed nations. "Though growth in emerging markets remains positive, they cannot be the counterweight to the synchronised downturn on their own," she says. "Emerging markets are experiencing a rise in inflation and slowing of growth. I think that we have a very difficult outlook for a long time to come, even for years." South Africa's inflation has been edging up, mainly because of food costs and administered prices that include fuel costs. Annual headline inflation stood at 5.3% in August, almost a year after it hit a five-year low of 3.2% in September 2010. Inflation has been inside the Reserve Bank's target of 3% to 6% since February 2010 and is expected to briefly pierce the target towards the end of 2011, peaking at 6.3% in the first quarter of 2012. The Reserve Bank has left the repo rate at 5.5% this year after reducing it by 650 basis points in the two years to the end of 2010. Analysts expect the bank to leave rates at current levels until mid-2012, with a small chance of another rate cut early next year.

JOHANNESBURG – South African policymakers should seek to address factors impeding private sector infrastructure expenditure, particularly given that private gross domestic fixed investment (GDFI) is twice that of the public sector with a commensurate impact on infrastructure input supply industries, Infrastructure Inputs Monitoring Project’s (IIMP’s) Dr Zavareh Rustomjee argues. Addressing a recent Infrastructure Dialogues gathering, Rustomjee notes that, while public expenditure on infrastructure almost matched the total private spend in 2010, owing to the downturn, private expenditure, particularly on buildings, still constitutes a large part of private sector fixed investment. Therefore, “unblocking impediments to private investment is equally important”. A new report by Investec economist Annabel Bishop goes even further, arguing that government and the State-owned enterprises (SoEs) “shoulder the minority of the country’s infrastructure needs, while the private sector remains the biggest investor”. The Investec report acknowledges that investment by the SoEs “has risen somewhat as a proportion of total”, but that of government spending has tapered off. Further, the dominance of consumptive-type expenditure within government is resulting in the funding burden for infrastructure being transferred to consumers, which was raising the price for consumers. The IIMP report states that, together, public and private expenditure on infrastructure form a significant proportion of total GDFI, accounting for R311-billion out of a total R355-billion in 2010 in 2005 rands.

JOHANNESBURG – South Africa’s projections of about 4% growth over the next three years are too ambitious in the current global turmoil, and the 7% growth it needs to create jobs might not be possible at the moment, Finance Minister Pravin Gordhan says. Weakening growth in developed markets and escalating market volatility have cast a shadow over South Africa’s economic outlook, and the world faces uncertainties for the next three to four years. Government has said the economy needs to grow by 7% a year on a sustained basis to decrease the unemployment rate, which is currently at over 25%. “At the moment, however, 7% might not be possible for South Africa. Our growth projections at the time of the Budget and before the current market turmoil were for the economy to grow by about 4% a year for the next three years,” Gordhan says. “Clearly, that’s far too ambitious in the current context, unless we do something spectacular for ourselves.” Economic growth in South Africa slowed to 1.3% in the second quarter of 2011. In February, at the time of the budget, the Treasury had forecast growth of 3.4% in 2011, 4.1% in 2012 and 4.4% in 2013. Current market turmoil, begun by Greece’s debt problems and exacerbated by a US credit downgrade in August, is also likely to affect South Africa’s borrowing in the international market. “The turmoil may also impact on international funding conditions, which are important to South Africa given that we intend to borrow almost R450-billion to fund our fiscal deficit over the medium term,” Gordhan says.

MAZIMBU – Public Enterprises Minister Malusi Gigaba has called for a new “ethic of international collaboration” to tackle Africa’s material infrastructure backlogs, which remain an impediment to intra-African trade and investment. Addressing the Solomon Mahlangu Freedom College, in Mazimbu, Tanzania, Gigaba argues that the aspiration should be to raise intraregional trade levels to at least the 40% to 50% levels of Asia and, ultimately, to the 80% levels being achieved in the European Union. A recent World Bank study shows that trade within Southern Africa remains worryingly low at between 10% and 12%, while regional intraindustry trade in parts and components is all but absent, lowering prospects for competitiveness-bolstering manufacturing synergies. Gigaba says that African economic integration is an important strategic priority for South Africa, as the country is at a structural disadvantage in building its industrial base owing to its remoteness from major global markets. “However, in relation to the African market, South Africa has a locational advantage – by failing to foster high levels of economic cooperation and integration in Africa, we are effectively imposing limits on the growth of the South African economy.” He sees infrastructure as the main enabler of trade and economic integration and the key stepping stone to regional integration. “For example, just through providing access to our electricity grid, we will enable neighbouring countries to invest in energy generation on a far larger scale than they would do in isolation. This will provide business with the confidence requisite to make further investments in these countries.”

Africa & the world

JUBA – The International Telecommunication Union (ITU) announces that the world’s youngest country, South Sudan, has joined the United Nations (UN) agency for information and communication technology (ICT). South Sudan has become the union’s one-hundred-and-ninety-third member State. The country, which gained its independence on July 9, has been allocated the international dialling code +211 by the ITU, following its recognition by the UN General Assembly. The dialling code became active on September 28. “We are delighted to welcome South Sudan as an ITU member State so soon after attaining full nationhood. The government recognises the importance of information and communication technology as an engine of social and economic development. We will work alongside the national authorities to leverage the power of technology, to help lift the country to new levels and fulfil the national motto of 'justice, liberty, prosperity',” ITU secretary-general Dr Hamadoun Touré says. The accession of South Sudan as an ITU member State implies its adhesion to the Radio Regulations, the international treaty which governs the use of radio communications among the world’s nations, giving it full access rights to the frequency spectrum and satellite orbit resources managed by ITU.

TRIPOLI – A military unit allied to Libya's new rulers says it has discovered a mass grave in Tripoli containing the bodies of more than 200 people who died in the chaos surrounding the rebel assault that ousted Mummar Gaddafi. Naji al-Issawi, a commander in a unit of Tripoli's military council, showed reporters two corpses exhumed from a cemetery, which he says contains between 200 and 300 corpses. Issawi says officials planned to dig up more of the site in the Gargarish district and start identifying the remains. An official from the cemetery says the corpses had been collected from streets and hospitals following the rebel assault on the Libyan capital in late August. One of the corpses displayed was largely decomposed and appeared to be clad in military fatigues and boots. Issawi says a separate burial site had been discovered elsewhere in the capital and could contain as many as 700 bodies. Since Gaddafi was toppled, more than a dozen sites have been identified as mass graves, including one at the capital's Abu Salim prison, site of a 1996 massacre of about 1 200 people, that became a rallying point against Gaddafi in the early days of the Libyan uprising.

TRIPOLI – The military commander of Tripoli, a key figure in the revolution that overthrew Muammar Gaddafi, has called on other militias to pull their weapons out of Tripoli, accusing them of terrorising the city’s population. The remarks by Abdulhakim Belhadj, whose Tripoli Military Council claims a mandate from Libya’s new rulers, follow rising concern about potential conflict among armed groups that converged on Tripoli to overthrow Gaddafi and have stayed on to demand stakes in a future government. They also follow the announcement a day earlier of another group that it will collect weapons and provide security in the name of the ruling National Transitional Council. That group, the Tripoli Revolutionists Council, say that it is cooperating with Belhadj’s group, but accuses it of carrying out arbitrary raids in the capital. “The sense of safety is turning into terror,” Belhadj says. “All who care about the security and stability of Tripoli need to work with us to bring it back. We need to end the presence of heavy weapons and keep them from proliferating, except among authorised parties.”