ABB advertises in South Africa at a Glance

Moneyweb advertises in South Africa at a Glance

BDO Spencer advertises in South Africa at a Glance

China Construction Bank advertises in South Africa at a Glance

Diamond Route advertises in South Africa at a Glance

Cacadu District advertises in South Africa at a Glance

Eastern Cape Dev Corp advertises in South Africa at a Glance

De Beers advertises in South Africa at a Glance

ENS advertises in South Africa at a Glance

Durban Investment Promotion Agency advertises in South Africa at a Glance

First Rand advertises in South Africa at a Glance

Eskom advertises in South Africa at a Glance

Free State Investment Promotion Agency advertises in South Africa at a Glance

Group Five advertises in South Africa at a Glance

Grindrod advertises in South Africa at a Glance

Industrial Development Corporation advertises in South Africa at a Glance

Ilembe District advertises in South Africa at a Glance

Mpumalanga Economic Growth Agency advertises in South Africa at a Glance

Invest Northwest advertises in South Africa at a Glance

Nelson Mandela Bay Municipality advertises in South Africa at a Glance

Rand Refinery advertises in South Africa at a Glance

Trade and Investment KZN advertises in South Africa at a Glance

Siemens advertises in South Africa at a Glance

Stepping South advertises in South Africa at a Glance

Brait advertises in South Africa at a Glance

Business Leadership SA advertises in South Africa at a Glance

November - January 2008 in South Africa

November - January 2008 at a Glance

[Monthly Article Archive]

High Noon at Polokwane

The ANC in-fighting between the Mbeki and Zuma camps continued to capture the media spotlight at the end of the year. As provincial caucuses and meetings of the important ANC Youth League and Women's League took place, it became increasingly clear that Thabo Mbeki was not going to succeed in winning a third term as leader of the ANC and thereby control the government from behind the scenes.. By the time the ANC met in Polokwane in December Jacob Zuma's followers had wrapped up a clear majority. The crowning of Zuma as President of the ANC was accompanied by the appointment of Zuma supporters to key ANC positions. Mbeki's choices for all key those posts were ignominiously dismissed.

So, while Zuma still faces the possibility of criminal charges for corruption, his slate of supporters will occupy the key party posts of Secretary General, Treasurer General and Deputy Secretary General, among others. Popular leaders within the party, such as Mathews Phosa and Cyril Ramaphosa, who had been publicly accused by the Mbeki regime of trying to foster a coup d'etat and were themselves mentioned as possible successors to Mbeki , were elected to chairmen of important committees. They could find themselves investigating Mbeki and some of his closest supporters for corruption in the arms deal.

A lot of political blood flowed at Polokwane and the full implications are not yet clear. As a group, the new leadership is substantially left of Mbeki. Gwede Mantashe, the new Secretary General, is a member of the Communist Party but is reputedly a man of great integrity. Zuma is something of a populist and captured the support of the trade unionists, the Youth League and the Women's League. But Zuma's victory was arguably a product of antipathy to Mbeki's governance as much as a groundswell of popular support for Zuma personally. Most people who worried about the international repercussion of Zuma's election would concede that on the issues important to South Africans - crime, HIV/Aids and Zimbabwe - Zuma could hardly be worse than Mbeki. And Zuma's control of the party apparatus and policy is likely to be far less than was Mbeki's.

The Economy and Infrastructure Struggle

Continued economic growth nearly always looks good but South Africa's infrastructure, the best on the continent, cannot keep pace. Ports, harbors and roads are unable to handle efficiently the increased flow of imports and exports. As a result, inflation jumped to well above the targeted rates of between 3 and 6%. At the end of October, headline inflation stood at 8.4% year-on-year and CPIX reached 7.9%. Economists predict that the inflation outlook remains poor. High food and oil prices led the inflationary push.

Predictably, the trade balance remained heavily in deficit with a cumulative deficit of R71.3 billion through October compared to R67.5 for the same period in 2006. The outlook is more of the same unless there is a substantial fall in the oil price. The large trade imbalance, in turn, led to the largest current account deficit in years.

By late January, the US economic slowdown and falling stock market were being felt in South Africa. The JSE fell 20% between October and January after several years of 20% plus annual growth. The outlook for 2008 is murky as the new year begins. High inflation and large trade and current account deficits are likely to persist. Interest rate movements are uncertain as the South African economy seems poised between severe inflationary pressures on one hand and a possible global economic slowdown on the other.

Meanwhile, the state owned power utility, Eskom, has had to resort to "power shedding" to try to cope with energy demands. Everyone experiences daily power outages and faulty traffic lights cause traffic jams. Experts predict that the power shortage will last for several years until new power generating plants can be brought on line, meaning that high energy use investment projects may have to be put off and ones already underway, like the Gauteng Rapid Transit, may be slowed down.

Leading Indicators

Gold Price - R888.25 (Jan 24,2008)

Platinum Price - R1546 (Jan 24,2008)

JSE All Share - 25,135 (Jan 24,2008)

CPIX Inflation - 7.9% (y-o-y October 2007); CPI - 8.4% (y-o-y October 2007))

Exchange Rate - R/$ 7.04 (Jan 24, 2008)

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