South Africa -State cannot build cheaper — Trevor Manuel

It is a mistake to assume that the state alone is responsible for improving infrastructure and can deliver it more cheaply than the private sector, says Planning Minister Trevor Manuel .

He questioned the controversial decision by the Cabinet last week to veto a deal between Telkomand South Korea’s KT Corporation, which would probably have resulted in lower data prices for consumers.

Deputy President Kgalema Motlanthe on Tuesday praised South Korea for propelling itself into the top-eight richest economies in the world by setting up a knowledge-based economy.

"Even when lucrative offers are on the table we seem not to be able to utilise them," Mr Manuel told a conference yesterday organised by the Bureau for Economic Research.

"We think we as a state can deliver more cheaply than the private sector."

KT was set to buy a 20% stake in Telkom for R3,3bn — a badly needed cash injection for the ailing company — but that would have diluted the government’s 39,8% share in Telkom.

Mr Manuel said capacity was a "fundamental challenge" in implementing the plans to upgrade SA’s infrastructure.

The government aims to spend R845bn over the next three years to improve roads, railways and ports, increase power supply and improve social infrastructure.

"This notion that the state should be responsible for delivery ... is a non-starter. If we want transformation, a lot will emerge from partnerships (with the private sector)," Mr Manuel said.

His comments are the strongest acknowledgement yet by a Cabinet minister that the government lacks capacity to deliver on its infrastructure plans.

Last week, Transnet CEO Brian Molefe said that possible capacity problems were one of the threats to the group’s R300bn investment programme.

Grahame McCaig, MD of construction and engineering group Aveng Grinaker, told the conference he was "shocked" by the dilution of skills when he returned to SA after an 18-year absence.

"It’s not just general management skills but trade skills ... manufacturing and construction productivity are going down.

"We need people who can use their hands ... it’s not just a South African issue, but it needs to be addressed very urgently."

Mr McCaig said more than 80% of his firm’s R34bn turnover in the financial year 2010-11 was generated by private sector projects. Lack of engineering skills in the government and municipalities was responsible for the lack of public sector participation.

A Presidential Infrastructure Co-ordinating Commission study released last month counted 5515 engineers in the public sector.

Mr Manuel said infrastructure should be paid for by its users, although the state had a role to pay in "lengthening the payback period". But the poor should be shielded from this, he added.

He was critical of the idea that high wage settlements would boost demand, saying they would only lead to greater poverty and inequality. Finance Minister Pravin Gordhan has pledged to keep public sector pay rises in check this year, but unions are already threatening action as their demands are not being met.

Global rating agencies have warned that the outcome of the negotiations could affect SA’s investment grade credit rating.

It was "necessary for the state to have the best sovereign rating that it can", Mr Manuel said.

isam@bdfm.co.za

South Africa - State fiscal watchdog warns on spend plans

The Finance and Fiscal Commission has cast doubt on the effectiveness of infrastructure spending to create jobs and redress poverty unless it is supplemented by other critical policy interventions.

The government and state-owned companies plan to spend about R845bn on infrastructure over the next three years, which they expect will contribute significantly to meeting the government job-creation target of 5-million jobs in 10 years. This spending is also key to the government’s New Growth Path policy and Industrial Policy Action Plan.

The commission, an independent body established by the constitution to make recommendations on fiscal policy and to assess the effect of government policies, urged the adoption of job-creation policies such as giving incentives to companies that create employment, enhancing productivity and promoting the informal sector.

The commission also argued in its 2013-14 submission for the division of revenue, tabled in Parliament on Friday, that the failure of the government, business and trade unions to reach a social compact on job creation needed "urgent redress".

Acting chairman and CEO Bongani Khumalo stressed at a media briefing yesterday that the report was intended to promote innovative initiatives to enhance economic development. The commission noted that "the negligible impact on growth of interventions such as an expansive infrastructure strategy or expanded public expenditures has important implications for fiscal policy".

The commission’s researchers examined several studies on the effect of infrastructure spending on projects such as roads, sanitation, electrification and dams on economies in sub-Saharan Africa. They found that while some were beneficial for poverty reduction, others actually caused poverty.

"At the very least, the finding suggests government interventions that emphasise infrastructure alone will make little impression on employment. Therefore, such interventions are not an adequate basis for introducing new economic sectors or raising the capabilities of existing economic sectors," the report read.

"Rather than replacing ageing infrastructure, new infrastructure should be used as a catalyst and long-term solution for economic development and job creation.

"The analysis shows clearly that fiscal policy (infrastructure and current expenditures) alone is not going to solve job-creation problems unless complemented by other interventions.

"New investments are required that allow shifts towards jobs and knowledge-intensive production and provision of government services. In all cases fiscal policy needs to be consistent with long-term fiscal objectives and take into account the limits of direct public-sector employment."

Department of Trade and Industry director-general Nimrod Zalk said the department would not disagree with the commission’s assessment that a wide range of interventions was needed to create jobs.

"Public investment will create important opportunities to either create new industries or generate a step change in production and employment in some existing industries. This includes establishment of an industry to supply components into renewable energy generation as well as to build rail rolling stock, both for the South African market and for export," Mr Zalk said yesterday

Investment Solutions chief strategist Chris Hart said yesterday infrastructure spending was "an important component, but not a necessary component" of job creation.

Such spending would not automatically produce spinoffs for economic growth and job creation as commonly assumed. Many examples show ed it had not generated growth, notably in Europe. The critical issue was decent economic leveraging off the spending, Mr Hart said.

"Infrastructure is only one aspect, but the government has pinned its entire strategy on infrastructure and virtually very little else. This one can see by the way they allocate resources," he said.

The commission recommended that companies that excelled in job creation should be rewarded and the Public Investment Corporation should direct its investments into such JSE-listed companies.

ensorl@bdfm.co.za

‘Balance African progress, climate change’

Climate change policy planning and funding of ameliorative efforts for global warming needed to take account of the “development trajectory” of the African continent, Finance Minister Pravin Gordhan told delegates to a climate change forum at the weekend.

Gordhan said he believed that Africa would be emerging as “a key player” in the world economy in the next 30 years.

He was speaking at the Climate Investment Funds (CIF) Partnership Forum, an annual event hosted by the African Development Bank (AfDB) and the World Bank where funding decisions on climate-smart development worldwide are taken.

“What Africa does require is that traditional paradigms of funding and aid need to be transformed,” he said.

“A new formula which links action on climate change to genuine development for the peoples of Africa for industrialisation and economic development… is needed.”

Such initiatives should be directed at genuine job creation and skills development “and urgent and systematic processes that will eradicate poverty on this continent as well,” he added.

Gordhan said he was “a firm believer” that Africa would become the site for research and development for new technologies and policies to fight climate change.

He said climate change was the “key issue facing humanity”, which he believed would test the human ability “to co-operate to overcome adversity, to overcome our instinct to act only within our own self-interest and attempt to act to redefine the global interest”.

“Let us ask ourselves how we can… reformulate the development trajectory on the African continent and use the opportunity… to ensure the benefits of growth don’t get left to a small elite,” he said, adding that the change should benefit Africa’s 1 billion people.

AfDB communications officer Chawki Chahed said that Africa would put nearly 40 percent, or $2.6 billion (R17.9bn), of the CIF’s $6.5bn to work across the continent this year.

The funding is earmarked for renewable energy and energy efficiency projects, climate-compatible development planning and sustainable forest management.

Delegates from 45 countries attended the forum. The African delegates hailed from Algeria, Burkina Faso, the Democratic Republic of Congo, Egypt, Ethiopia, Ghana, Kenya, Mali, Morocco, Mozambique, Niger, Nigeria, South Africa, Tunisia and Zambia.

Donwald Pressly  http://www.iol.co.za/business/business-news/balance-african-progress-climate-change-1.1088893


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South Africa approves Wal-Mart bid, govt could take action

South Africa approved Wal-Mart’s R16.5 billion (US$2.4 billion) bid for control of retailer Massmart with minimal conditions on Tuesday, giving the world’s top retailer a big boost in its plan to expand in fast-growing Africa.

South Africa’s Competition Tribunal told Wal-Mart not to cut jobs for two years, honor existing labor agreements, and work to develop local suppliers, concessions the US firm had earlier proposed itself.

The deal gives Wal-Mart a 51 percent stake of Massmart, a discount retailer that sells everything from liquor to televisions and has a presence in at least a dozen African countries.

The decision will be seen as a major advance for Wal-Mart, which had said it could drop its offer if the government imposed targets on using local suppliers.

“This is good news. It included concessions put forward by both parties so it’s a victory all round,” said Paul Theron, CEO of Johannesburg-based asset manager Vestact.


“It shows that South Africa is open for business, that large corporates are potential players for outside investment.”

Massmart must also “give preference” to reemploying 503 workers fired in 2010, set up a R100 million (US$15 million) fund to help develop local suppliers, and not challenge SACCAWU’s right to represent bargaining units for three years, the tribunal said.

The two companies said in a joint statement they were “pleased” with the decision and expected Massmart’s food business to grow by 50 percent over the next five years.

The decision was a victory for Wal-Mart, as it did not impose restrictions on where it sources it goods, said Brian Sozzi, a New York-based analyst at Wall Street Strategies.

“In two years it looks like they can go to town on labor costs,” he said.

“The whole thing with them is to get goods into the South African market as cheap as possible and sell them as cheap as possible.”

However, the ruling is a blow to South Africa’s influential labor unions, one of which is already considering an appeal.

“We are meeting with our legal representatives to explore legal options,” said Mike Abrahams, a spokesman for the South Africa Commercial, Catering and Allied Workers Union (SACCAWU), adding that the union could consider appealing to the Competition Appeals Court.

That could further delay the deal, which was first announced in September 2010.

The deal was a test case for major foreign investment in South Africa, which has the continent’s deepest capital markets but where unions are in a coalition with the ruling African National Congress.

Three government departments – economic development, trade and industry, and forestry and fisheries – and the unions had lined up against the deal, asking the tribunal to impose targets on local procurement and a freeze on job cuts.

The government and unions have said Wal-Mart’s global supply network could lead to a flood of cheap imports, sparking job losses and squeezing local companies.

“We would have hoped that the deal would be rejected or at least much more stringent conditions be imposed,” said Patrick Craven, a spokesman for the COSATU union federation.

“Our biggest concern remains completely unanswered, and that is the knock-on effect on jobs in other retailers and the manufacturing industry.”

The three departments said in a joint statement late on Tuesday they would need further study to determine whether the conditions were sufficient enough to prevent widespread job losses.

“Based on the outcome of the study of the conditions and the responses of Wal-Mart/Massmart, we will decide on the next steps to take. Government reserves its legal options at this stage,” the three departments said.


http://www.tralac.org/cgi-bin/giga.cgi?cmd=cause_dir_news_item&cause_id=1694&news_id=104482&cat_id=1026

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Walmart’s SA play leads to Africa

The Walmart issue stirred so many passions on both sides of the free market versus workers dictatorship divide that the only sensible decision the Competition Tribunal could settle on was something resembling the wisdom of King Solomon, who threatened to cut a disputed baby in half, prompting the real mother to speak up and save the child.

Except in this case, the tribunal simply split the issue down the middle, setting conditions that were not too onerous and making concessions that don’t cost too much.

Steven Kilfoil of corporate finance at Grant Thornton says, with a weather eye on potential foreign direct investment: “The decision is hugely positive. If they had imposed seriously onerous conditions, that would have been negative in a big way.

“We are trying as a country to get away from people just investing their money in (the JSE) and taking it away at a moment’s notice. We are trying to get them to invest properly in South Africa by building businesses. The South African play by Walmart leads to a much larger African play. If we had imposed serious conditions on Walmart, that would have been seen as prohibitive and anyone else contemplating investing here would have run away.

“Take the introduction of the Companies Act, we couldn’t get the dates right – amateurish is about the kindest thing that can be said about that. The foreign investor is looking for a place of safety and comfort and all he hears is talk of nationalisation and unions trying to intervene in how business is done. Let us just be glad that common sense has prevailed.”

That will give a lot of comfort to foreign investors.

Walmart

Attempts to elicit comment from the Economic Development Ministry of Ebrahim Patel on the landmark decision on Wal-mart being given permission by the competition tribunal – with certain conditions – to buy control of JSE-listed Massmart proved fruitless yesterday.

Understandably Zubeida Jaffer, the minister’s spokesman, could not comment as she took ill on Monday and was rushed to a Johannesburg hospital. Someone who answered her phone referred the matter to a Dumi Makwetla – apparently a new staff member – but he switched off his phone.

Jaffer’s assistant, Roslyn Daniels, was courteous, but unable to help. But she indicated that the minister was in a departmental meeting for two days in Johannesburg, with his senior staff. A call to Richard Levin, the director-general, was answered but he indicated he was “in an important meeting” and could not talk.

ANC spokesman Jackson Mthembu’s phone was engaged but then rang. It was subsequently switched off. The phone of second spokesman Keith Khoza took messages, not returned. A third man listed as spokesman Moloto Mothapo, a spokesman at Luthuli House during the municipal election campaign, has returned to Parliament in Cape Town to his old job as the chief whip’s spokesman. He indicated he could not answer questions on the ruling, which was a Luthuli House matter.

Finally spokesman Brian Sokutu said while the ANC welcomed the ruling “we share sentiments expressed by labour federation Cosatu that this massive investment which is certainly set to stimulate economic growth… should not lead to job losses. Job creation is one of the key ANC priorities with (the president) already having announced a special fund to create jobs”.

The silence of Economic Development, however, is perplexing, especially as Patel sought from Walmart in February “strong local procurement, that the South African supply base is supported and that our capacity to create jobs locally is highlighted”.

The conditions of the ruling pretty much carried out that mandate.

Competition Tribunal

For those puzzling over the what many consider to be rather light conditions imposed on Walmart and Massmart, the following from the Competition Tribunal may shed some light.

“Our job in merger control is not to make the world a better place, only to prevent it becoming worse as a result of a transaction.” These are the words of the tribunal in a statement issued yesterday, which announced its decision to approve Walmart’s acquisition of 51 percent of Massmart, with conditions.

It added: “This narrow construction of our jurisdiction has not always been appreciated by some of the interveners who have sought remedies whose ambition lies beyond our purpose. It is not our task to determine whether those ambitions are legitimate public policy goals; only whether they lie within our powers.”

This goes some way to explaining why the conditions imposed on the merging parties are so moderate, especially given the effect the deal will have in South Africa, on suppliers specifically. A full explanation from the tribunal is expected in 20 days.

The tribunal says it is required by law to be aware of public interest concerns, but the law limits its ability to remedy concerns. In addition, the purpose of public interest concerns is not to protect firms from losing out to market forces, but to protect a substantial public interest.

So it may see a problem looming, but not have within its scope the means to remedy it. That is not to say that the tribunal has taken the view that the deal will present problems. In fact, it says a likely outcome of the merger based on Walmart’s history is low prices and consumer choice.

But it concedes that just how significant those benefits will be is not clear.

Walmart itself cannot (or will not) put a number to this claim, despite many acquisitions over many years in many parts of the world, which could provide quite specific details on just how much (or how little) consumers have benefited.

Questions over the merits of this deal are not likely to evaporate now that it has been approved. Instead evidence of the many touted benefits are eagerly awaited.

Edited by Peter DeIonno. With contributions by Peter DeIonno, Donwald Pressly and Samantha Enslin-Payne.

http://www.iol.co.za/business/opinion/business-watch/walmart-s-sa-play-leads-to-africa-1.1076735

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South Africa - A Very Sick Society - Vavi

Keynote address to the Civil Society Conference by Zwelinzima Vavi, General Secretary of COSATU, 27 October 2010, Boksburg, South Africa

How can we build on the World Cup success and mobilise our society to build a more egalitarian nation

Comrade COSATU President, Sidumo Dlamini
Comrade TAC Chairperson, Nonkosi Khumalo
Representatives of COSATU, NACTU, FEDUSA and CONSAWU
Representatives of civil society formations
Comrades and friends

Inspired by the African proverb that says ‘If you want to go quickly, go alone. If you want to go far, go together', we gather here - as the progressive trade unions, social movements, NGOs, progressive academics, small business and street vendor associations, taxi associations, religious bodies, youth organisations, environmental groups, indigenous peoples' groups and other progressive formations - to say to ourselves that we have the capacity to make a decisive contribution in changing our current situation for the better.

Internationally, globalisation and neoliberal have launched assaults on the working class, which include, but are not limited to: informalisation, flexibilisation, regionalisation of states, deregulation, marketisation, financialisation, and securitisation. The global governance, commercial and trade system is supported by political and ideological institutions, rules and enforcement mechanisms that only broad civil society coalitions have historically been able to challenge successfully.

In South Africa, the GEAR strategy epitomised the dominance of the neoliberal ideology within the leading sections of the government. The neoliberal logic still continues to be dominant, in spite of some talk about a developmental state. Increasingly though it has taken a more crude political expression and there are some emerging elements that tend to perceive the working class and active elements of civil society as merely being a nuisance that must be crushed with the might of the state apparatus.

Today, as we gather here, there is panic in the ranks of the predatory elite, which is a new coalition of the tenderpreneurs. Paranoia elsewhere is deepening with the political elite, convincing itself that any gathering of independent civil society formations to confront our challenges is a threat to them.

Let us right from onset state that we are not an anti-ANC and anti-government coalition. We are not here to begin a process to form any political party, nor to advance the interest of any individual. We have only one enemy - neoliberalism, that has condemned our people to poverty and unemployment. We want to roll back neoliberal advances and struggle for the adoption and implementation of alternatives. Our struggles have to be both defensive and offensive.

We are friends to all genuinely anti-neoliberal and pro-poor and working class political parties that have an undisputable record of struggle to advance our interests as the marginalised societies.

We gather here to say another South Africa is possible! Another world is possible!

On 11 July, just four months ago, all South Africans were basking in the reflected glory of our successful hosting of the best-ever FIFA world Cup. The whole world saw our country at its best - united, efficient, friendly and enthusiastic.

The question we were all asking was - if we can organise such a brilliant event so well, how can we use the qualities that contributed to that World Cup triumph to create jobs, build houses, provide education for our children, launch a free national health service and solve all the other major problems we face.

So we urged the government and every union, civil society formation, political party, business and faith organisation to sign a new declaration in support of a programme to rebuild our country and build a lasting legacy of the 2010 World Cup.

Today's historic conference takes this decision forward. It brings together the people who are best able to meet this challenge - South African civil society and trade unions. The forces we represent here today can - and indeed must - have a decisive say in the future of our country. Our goal must be to forge a strong, united movement for change.

A similar united social movement - of COSATU, the UDF, civic movements and progressive NGOs - played a critical role - alongside the unbanned ANC and SACP - in bringing the racist dictatorship to its knees in those decisive years leading up to our democratic breakthrough in 1994.

The challenges we face today are different but nevertheless very major and require a similar mobilisation of the democratic forces as we saw in those years.

Comrades and friends

In our 16 years of democracy we have achieved major advances. We have a democratic Constitution and many laws, which have given South Africans basic rights, on paper at least, to freedom, dignity and equality.

There have been significant important improvements in the lives of millions of our people. As examples: In 1996, only 3 million people had access to social grants; today the figure is 14 million. In 1996, 58% of the population had access to electricity; today the figure is 80%. In 1996, 62% of the population had access to running water; today the figure is 88%. We have built 3.1 million subsidised houses, giving shelter to over 15 million people.

Despite our historic victories on the political battlefield, however, in the economic arena, many of the problems we faced in 1994 are still very much with us in 2010.

The central challenge is that our economic structure, in particular the distribution of wealth and income, remains largely unchanged, and in one crucial respect - inequality - has worsened, to become the widest in the world, and it also still reflects the racial and gender features of apartheid, with wealth and financial power still predominantly in the hands of white males.

The top 20 paid directors in JSE listed companies earned on average 1 728 times the average income of a South African worker while state-owned enterprises paid CEOs 194 times an average worker's income.

Typical of everything that is wrong with our society today, is this week's announcement that Standard Bank, whose CEO Jacko Maree received a massive R18, 2m in 2009 alone, intends to retrench over 2000 staff, making workers pay the price for their bosses' extravagance and incompetence.

In the 21 months from January 2009 to September 2010, we have lost 1 145 000 jobs, which, as we keep saying means that because each wage earner supports on average five dependents, more than 5.7 million people were thrown into poverty. The latest figures released yesterday reveal that the official rate of unemployment is still rising, even if more slowly, to 25.3%; a further 45 000 jobs were lost in the third
quarter of 2010.

In education - although we have made progress in many areas, such as the improved access to education, in particular for girl children, reduction of the teacher to pupil ratio, the introduction of more no-fee schools, etc. - black working class students are still at the receiving end of an unequal system. We have not transformed the education system in either quality or quantity.

The drop-out rate for children who started school in 1998 was 64%. Our matric pass rate last year was 60.6%. A staggering 70% of (matric) exam passes are accounted for by just 11% of schools, where the mainly white rich can buy their children top-quality education. The culture of learning and teaching has collapsed and many of our schools, in particular in the former blacks only residential areas are dysfunctional. Many of our schools have no libraries and no laboratories.

It is the same story in our healthcare service. The apartheid fault lines persist. While the mainly white wealthy can buy world-class healthcare in the private sector, 86% of mainly black poor have to struggle to get any service at all in an under-funded, understaffed public sector where in some parts patients are told to bring their own bedding and with only Panado available, in filthy hospitals where rights of patients are hung on the wall but not their living reality.

Although we rank 79th globally in terms of GDP per capita, we rank 178th in terms of life expectancy, 130th in terms of infant mortality, and 119th in terms of doctors per 1000 people.

The HIV and AIDS epidemic has worsened our situation, with life expectancy dropping from 62 years in 1992, to 50 years in 2006. Yet we know that in terms of South African Institute of Race Relations survey in 2009, the life expectancy of a white South African now stands at 71 years and that of a black South African at 48.

Comrades and friends

The high levels of poverty and inequality aggravate many other anti-social phenomena which we see increasingly - violent community protests, xenophobia crime, corruption and the collapse of social and moral values. We face not just personal and family disasters but a national catastrophe, a ticking bomb, which has already begun to explode in our poorest communities.

This was our reasoning behind calling this summit. We can't stand there making speeches without developing a programme that will mobilise our society to stop this ticking bomb from exploding. "The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy." Martin Luther King, Jr.

Corruption in particular is a matter of life and death for our democracy. Day after day we see allegations of trusted public representatives being accused of using their position to enrich themselves and their families. Some allegations may be groundless; most public officials are honest servants of the people. But only full investigations into every allegation will clear the innocent and lead to the conviction and punishment of those who steal from the poor who put them in power. We should give our full support to the government's efforts to bring offenders to justice.

The source of the problem has always been the capitalist system, which is run on the principle of ‘me-first'. Whilst workers' universal slogan is "an injury to one is an injury to all" the capitalist mentality daily practises: "an injury to one is an opportunity to another".

For every official who receives a bribe there is a businessperson who gives the bribe to ‘persuade' the official to use his or her political power to advance private commercial interests. This is the biggest threat to our efforts to establish a transparent and corruption-free government.

It is even worse when the public representatives themselves, or family members, are getting rich from government tenders. The mere fact that they are in business to make money creates an inevitable conflict of interest when they are legislating in parliament, a provincial legislature or municipal council.

The danger always exists that in formulating policy, they will be guided by the impact this will have on their businesses rather than the broader public interest. We have called on our public representatives and union leaders to choose between being people's representatives or being in business.

It is greed that is inspired by the conspicuous consumption of the new elite - the BEE types who blow up to R700 000 on one-night in parties that makes the public representatives not want to live within the means provided by their salaries and rather hefty perks.

The corrupting morality our public representatives is seen in these parties. where I am told in one party sushi was served from bodies of half naked ladies. It is the sight of these parties where the elite display their wealth often secured in questionable methods that turn my stomach. It is this spitting on the face of the poor and insulting their integrity that makes me sick. Next year this elite will not go out door-to-door to get our people to vote. But soon thereafter they will host victory parties to scavenge on the carcass of our people like the typical hyenas that they are.

Our belief is that if we were to confiscate all the medical aids, that most of us here have; if our cabinet Ministers and MPs were forced to take their children to the public hospitals and be subjected to the same conditions as the poor; if we were to burn their private clinics and hospitals and private schools; if the children of the bosses were to be loaded into unsafe open bakkies to the dysfunctional township schools; if the high walls and electronic wired fences were to be removed; if all were forced to live on R322 a month, as 48% of the population has to do, and if their kids were to die without access to antiretrovirals, we would have long ago seen more decisive action on many of these fronts.

Our society in many ways is a very sick society. In addition to allowing these massive inequalities and for apartheid to continue in the economy, we are now sitting indifferent when the new elite is on rampage, humiliating the very motive force of our liberation struggle.

A few kilometres from where we are today hundreds of workers have not been paid for 10 months by their black empowerment bosses in the company called Aurora. Young people in their 20s and 30s have become overnight multimillionaires. A message is being sent out to our students that says:

‘Why work so hard when few correct political-sounding speeches and demagoguery can make you a multimillionaire'.

It says to the genuine entrepreneurs:

‘Why sweat when political connections and greasing the hand of those in political office can make you an instant billionaire?'

We are rewarding laziness, greed and corruption and discouraging hard work, honesty and integrity.

In the process we making our political organisations new battlegrounds where we have replaced the apartheid regime in killing and poisoning those identified as a threat to the march to gain these not-worked-for riches. Look at what is happening in COPE, IFP? Now even Lucas Mangophe is not safe. Look at what is happening in the ANC in some provinces. Look at the number of splits in every political party.Genuineness is fast becoming a rare commodity!

But as the poor and the black people in general, we can't afford to sit on our laurels and do nothing about these conditions. Our dream is that of a mobilised poor that takes its destiny into its own hands.

Why must we allow our schools not to function when we have numbers to flood the school governing bodies, and insist that teachers must be at school all the time, must prepare for classes and must teach for 7 and half hours for five days a week?

Why are we not mobilising to deal with the ill-discipline of our own kids? Why are we not mobilising to change the culture of mainly working class parents and taking an active interest in the education our children? Why have we not mobilised to change the work ethics of our members in the public sector so that they give the first-class treatment to the poor who have no money to go and get better services in the private sector?

Why have we allowed criminals to take our freedom away and return to our townships after 1994, only to rape and murder us daily, one by one, when we have the power of the numbers to drive them out? Why are today allowing a new class of tenderpreneurs to threaten our freedom and impose stinking morality of greed?

Yes we are angry! Yes COSATU is angry! Yes our tolerance levels are running thin! We can no longer just fold our arms and do nothing. Today we are here to say we want our freedom back from the elite and all these rogue elements of our society. Their party must come to an end. We demand a more egalitarian society today and moving forward!

Comrades and friends

The roots of nearly all these problems lie in the failed economic policies adopted in 1996, centred around the misnamed Growth, Employment and Redistribution (GEAR) strategy. It led to growth at a snail's pace, higher unemployment and only redistributed wealth from the poor to the rich! It was a policy based on the misguided free-market, neoliberal policies of the ‘Washington consensus', which led directly to the devastating worldwide economic crisis of 2008 and 2009.

The government yesterday announced its new growth path, which aims to create 5 million jobs by 2020, bringing the unemployment rate down to 15%. While we obviously welcome and support such a target, we shall have to study in detail how the government's new growth plan will achieve this.

COSATU has accepted the challenge to produce its alternative strategy. In "A Growth path Towards Full Employment", we set out a path which will transform our economy into one based on the expansion of manufacturing industry and the creation of decent and sustainable jobs. Let us hope we have persuaded government to base their new growth path strategy on the same principles.

But most important is that the strategy must be turned from words into deeds. It will be a tragedy if we miss this historic opportunity to build a developmental state and turn the economy around.

It would be a disaster if the government were to believe that we can continue with the status quo. It would mean condemning another generation of living with no jobs, no money and no hope.

So I appeal to every organisation represented here today to sign the post-World Cup Declaration, which will commit us all to:

1. Remain united behind Bafana Bafana and do everything possible to promote soccer, which remains the biggest and most popular sport, yet is seriously under-developed. We need to develop academies to hone the skills of unknown South African Peles, Drogbas and Ronaldos, who have no opportunity for their skills to be recognised.

2. Bring down the astronomical levels of unemployment, poverty and inequality, which blight our land. Even as we prepare to host the World Cup, jobs continued to disappear, inequalities continued to grow and poverty remain widespread after the World Cup. We need a new economic growth path that will help address these challenges with necessary urgency and speed.

3. Address the challenges of our education system. The 1-Goal Campaign and the Nelson Mandela Day celebrations offer an opportunity to take our international icon's dream to new heights. We call on government to prioritise building and refurbishing schools and to ensure that all schools receive adequate support from the education departments at all levels. We must move beyond the call for all to donate books and build school libraries on Nelson Mandela Day and run for 12 months until every school functions and is a centre of empowerment to build a new generation that can take our dreams to a new height.

4. Unite behind a goal of transforming our health system and implementing the National Health Insurance Scheme. We have to fix our public hospitals and defeat the scourge of HIV/AIDS to build a healthy nation and improve our country's life expectancy.

5. Address underdevelopment and poverty in rural areas. This campaign should address food insecurity and empower our people to use land that currently lies unused, so that people can produce the food they need and escape from their deep levels of unemployment and poverty.

6. Lead a campaign against crime and corruption. We can build on the successes of the World Cup by sending out an unequivocal message that crime does not pay. Corruption is stealing from the poor to feed into narrow elites' selfish accumulation interests. Corruption kills the spirits of the majority, black and white, who want to work hard to build their country.

7. Mobilise to fix the energy challenge the country is facing. We need more action and not empty words to ensure that South Africa moves out of the current crisis. Imagine a day when thousands of activists move door-to-door handing over pamphlets to our people educating them about the benefits of saving electricity.

8. Mobilise to address the looming water shortage crises so that we do not wait for 2025 when the problem will be much more intense. Let us through our people hold the mine bosses who have been allowed after making billions to abandon their now empty mines and pollute our water. Let us defend our environment and keep our country beautiful and natural whilst also developing.

9. Mobilise the working class and educate them to appreciate that no matter how bad living conditions are, there can be no excuse for blaming fellow-Africans and other foreign nationals for the country's and continent's economic failures. Let us do everything possible to prevent a new outbreak of xenophobic attacks in some of our poorest communities. They are not the cause but the fellow victims of our unjust and unequal economic system. Workers and the poor must stand united against the common enemies of capitalist greed and corruption.

10. Lastly and most importantly, address the massive challenges of underdevelopment in the continent. Africa cannot succeed in developing its economies and transforming the lives of our people while it is still ravaged by poverty. Let us defeat the tyrants in Swaziland, Zimbabwe, Sudan and elsewhere whose refusal to vacate their positions and allow democracy means that can be no hope of Africa ever rising to ensure a coordinated effort to defeat under development. Let us mobilise to free our people in Western Sahara from their colonial masters!

These are just some of the many challenges we face. I look forward to hearing the outcome of the commissions and hope that we shall emerge from this conference tomorrow united and determined to build a South Africa run by and for the working class and the poor. I wish you a very successful conference.

Issued by COSATU, October 27 2010

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Fifa coins it as assets grow beyond $1-billion

Football's world governing body FIFA announced Thursday a recession-busting boost to its finances on the eve of the World Cup despite the economic turmoil buffeting the world.

The 60th FIFA Congress, meeting in Johannesburg, heard revenues topped a billion dollars in 2009 for the first time thanks to marketing and TV contracts -- up sharply from 575 million in 2003.

Expenses were 863 million dollars.

And FIFA’s equity stood at more than a billion dollars at the end of 2009 -- a vast increase compared with just 76 million dollars in 2003.

FIFA President Sepp Blatter, who confirmed he would be standing for election for another term in 2011, said the World Cup in South Africa would generate more income than the tournament four years ago in Germany.

"It's not a question of whether the country is richer or not, rather it is a question of the product and the product is the FIFA World Cup and the product can only be good if the football is good," he told a press conference after the close of the Congress.

Member associations were told that due to the financial success, each would receive a bonus of 250,000 dollars in 2010 and the six confederations would each receive an extra 2.5 million dollars.

An upbeat Blatter, president since 1998, confirmed he would seek re-election at the next Congress in Zurich in 2011 but would not be drawn on whether that would be the last time he would stand.

"I am going to be frank and direct. I haven't finished my job," said Blatter. "I am ready for another mandate at the 61st Congress in Zurich in 2011."

Blatter, 74, later told the press conference: "I'm a happy man because of a happy Congress but now I'm waiting for the kick-off.

I'm really excited," adding that the tournament would be a "win-win" for Africa.

The Congress also heard presentations on measures to protect minors, including the registration of all players whether they are playing for clubs or academies.

And delegates were given an update on the transfer matching system for all international transfers, which will be mandatory from October 1.

Under this system all data relevant to a transfer must be entered into a web-based tool, ensuring full transparency in the process.

Blatter said such measures were important in tackling the exodus of young players from their home countries.

"Naturally we cannot stop everything but once registered, we can intervene," Blatter added.

The Congress also confirmed the suspension of the football association of Brunei Darussalam.

http://www.timeslive.co.za/sport/soccer/article498288.ece/Fifa-coins-it-as-assets-grow-beyond--1-billion?service=print

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South Africa establishes new sources

The visit by South African President Jacob Zuma to Algeria a week ago gave a glimpse of an ongoing shift in the country’s oil relations with other countries. For the past decade or so, the focus has increasingly been to lessen dependency on traditional sources, while engaging new sources in Africa and elsewhere. Other considerations regarding the country’s fuel security have also come into play as oil in South Africa is fast becoming a whole new ball game.

Historically, South Africa has imported most of its crude oil from the Middle East, with a number of major multinationals such as BP, Shell, Caltex, and Total maintaining a dominant presence in the country.

Engen is another player that emerged as a domestic company when Mobil disinvested during the apartheid sanctions years. Engen has since been taken over by Malaysia’s national oil company, Petronas, with which the South African government has a close relationship.

Sasol developed into a major South African oil company in the 1960s, and in recent years into a global player. It supplies fuel-from-gas for the domestic market.
By 2001, Mossgas and Soekor were merged into state oil and gas company PetroSA in a rationalisation of the state's commercial interests in this sector.

PetroSA is involved worldwide in oil and gas exploration, while both Sasol and PetroSA are involved in importing gas and producing liquid fuels from gas.

PetroSA, alongside the Strategic Fuel Fund Association, the Central Energy Fund, and the Petroleum Agency South Africa, all play various roles relating to oil procurement, storage, exploration, marketing and distribution.

This includes managing the Saldanha Bay oil storage facility, one of the largest of its kind in the world, built in the apartheid era to counter sanctions.

Apart from exploration, PetroSA operates two offshore oil fields near Mossel Bay as well as various gas fields along the southern African coast. Multinational oil companies in South Africa also operate a well-developed refining and downstream oil industry. However, their refineries at Cape Town and Durban are ageing and becoming less competitive.

In recent years – because of geopolitical volatility in the Middle East – South Africa has worked toward reducing dependence on oil from Iran by increasing imports from Yemen, Qatar, Iraq, Kuwait, United Arab Emirates, Egypt and Saudi Arabia. At the same time, it has tried to lessen overall Middle Eastern imports and spread its sourcing increasingly to non-Middle Eastern countries.

Imports now come from African countries, South America, Russia and others.
This shift in focus has seen a number of significant oil deals being concluded recently. The first major, and controversial, was in September 2008 when President Hugo Chavez of Venezuela visited South Africa. The two countries agreed to co-operate in oil and gas exploration in Venezuela, refining Venezuelan oil at South Africa’s proposed new refinery at Coega in the Eastern Cape, investment by Venezuela’s state oil company in a local refinery and storage facilities, PetroSA sharing its gas-to-liquids technology with Venezuela, and more.

The announcement heralded another important step toward lessening South African reliance on oil from the Middle East. And there were distinct advantages for South Africa relating to the government’s concerns regarding security of oil supply as outlined in its Energy Security Master Plan for Liquid Fuels that had been released shortly before.

The South African government at the time also believed that Venezuelan oil processed by PetroSA for local consumption would help reduce domestic fuel prices.
In August 2009, during bilateral trade talks, South Africa and Angola signed a number of trade agreements, including co-operation in the oil sector. The oil agreement would allow Petro SA and Angola's Sonangol to work together in oil projects, said Angolan President Jose Eduardo dos Santos at the time.

The state-owned oil companies would work together in the areas of exploration, refining and distribution of oil, it was announced.

With Angola already challenging Nigeria as Africa's largest producer of crude oil, and having enormous hydroelectricity potential, energy was said to have been a key area of discussion. And Brazil and China, two countries with which South Africa has recently been enjoying beneficial and vastly increased trade relations, are already involved in the reconstruction of Angola, including its oil interests.

Shortly after the Angola agreement was signed, it was announced by the Industrial Development Corporation (IDC) in an economic report that South Africa’s trade with the world's four largest emerging markets - Brazil, Russia, India and China (BRIC countries) – had increased from $20.3 billion in 2001 to about $162bn in 2008. Among the bulk of these imports, excluding China, were crude oil and non-crude petroleum products.

During President Zuma’s visit to Algeria last week, he signed, among other things, a memorandum of understanding involving increased trade and co-operation between PetroSA and Algeria's Sonatrach.

PetroSA has been involved in oil production in Nigeria since 2004 and it was said some time ago that the company would be pursuing an interest in two oil blocks in the Democratic Republic of Congo (DRC).

In April, President of the Republic of Congo (Congo-Brazzaville) Denis Sassou-Nguesso announced in Pretoria that the South African company would be given oil production rights in his country.

Equatorial Guinea is another African country with which South Africa has in recent years been stepping up its trade relations, believed to also involve oil.
In addition, PetroSA and Sasol are already importing gas, mainly with a view to boosting the local gas-to-liquid fuel production. These imports will assist to extend the life of PetroSA’s gas-to-liquid refinery at Mossel Bay.

Apart from that, PetroSA has focused its natural gas exploration activities in southern Africa, and exploring for oil in Egypt, Sudan and Equatorial Guinea.
Sasol Synfuels and Qatar Petroleum (QP) signed an agreement to jointly construct an $800-million gas-to-liquids plant.

A development that is symptomatic of the changes taking place in South Africa’s oil supplies is the fact that, after years of secrecy, overriding political and security considerations and protected monopolist practices, the fuel industry in South Africa is heading for a new showdown as competing players variously promote and resist new options in a changed global and local environment.

While state-owned PetroSA wants the government to invest billions of taxpayers’ rands in a new 400 000 barrels-per-day refinery at Coega, known as the Mthombo Project, one of the largest petroleum groups active in South Africa, BP Africa, is cautioning the government against approving the refinery project of more than R77bn.

In fact, BP chief economist Christof Rëhl recently visited South Africa to promote BP’s argument that the proposed refinery would cost a great deal of money for relatively little employment and would not improve anything.

BP also argues that the costs are likely to be much more than envisaged, and that there is a surplus refinery capacity worldwide at present which is likely to be the case beyond 2020.

A new refinery now would be an unfair burden for taxpayers, the company argues, and calls for a comprehensive review of all supply-side options that could have far-reaching implications for the industry. It maintains that the surplus capacity is such that a new refinery would hardly improve South African fuel security.

But the government has so far rejected objections from oil companies such as BP. Last month, Energy Minister Dipuo Peters said the project was key to providing a solution to domestic liquid fuel challenges. According to her, it would address the gap between demand and supply, further reduce the dependence on imported finished product, and promote new standards for clean fuels.

PetroSA has also maintained that building the Coega refinery is the most sustainable solution for meeting the country's need for supply-side security and improved fuel quality. Of course, PetroSA is also concerned about the fact that it has already spent more than R250m on the project, with a further pending investment of R2.4bn to complete the front-end engineering design of the project.

On the other hand, it is widely suspected in industry circles that BP and the other large oil companies operating in South Africa have every reason to resist the competition from a new player which could cut heavily into their super profits, particularly as their conventional refineries are ageing, uncompetitive and not living up to the latest emissions standards.

Mthombo, some say, could threaten the very existence of the oil multinationals in South Africa.

On the local oil exploration front, after years of showing no interest it, it seems Petro SA’s activities, along with new foreign partners, may have prompted the oil giants into action. It has just been announced that Shell hopes to explore for oil and natural gas over an extensive area of South Africa's West Coast. With seawater depth in the proposed region ranging from 150m to about 4 000m, this is likely to be the deepest that Shell has ever prospected for oil.
Indeed, when it comes to South Africa’s oil interests, the time
s they are a changing.

Leadership http://www.leadershiponline.co.za/

http://www.leadershiponline.co.za/reports/617-oil-supply-full-report

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South Africa - High drama at Eskom

Johannesburg - In a day of high drama, Eskom has been rocked by two high-level resignations and the return of CEO Jacob Maroga, raising concerns that foreign money to fund its expansion plans will now be harder to find.

Fin24.com's Sikonathi Mantshantsha reports that Allen Morgan, a non-executive director, tendered his resignation following that of chairperson Bobby Godsell. Morgan works at Kumba Iron Ore, owned by Anglo American.

Last week, Godsell announced to staff at Eskom that Maroga, who came under fire for his management of the parastatal, had resigned with immediate effect.

However, the ANC Youth League and the Black Management Forum insisted that he had not. The BMF charged that state-owned enterprises had become "slaughterhouses" for black professionals while the Youth League reportedly said Godsell had turned on Maroga because he was black.

Godsell resigned on Monday morning as news spread that Maroga was back in his office.

In a statement released on Monday night, Godsell said government was unable to support the board's original decision to accept the resignation of Maroga or its two attempts at resolving this dispute.

"In these circumstances, and with the best interests of the organisation in mind, the only course of action seems to me to resign as chair and as director."

Godsell said Maroga offered to resign on Wednesday October 28. "The board accepted the resignation. The board's legal advice is that the resignation was quite clear in its intent, and the board was entitled to accept it," said Godsell.

However, on Thursday Maroga denied resigning. Godsell said the board offered to submit this dispute of fact to binding private arbitration. "Mr Maroga has not responded to this offer."

Godsell continued that government, as Eskom's sole shareholder, has been unable either to support the board's original decision (to accept the resignation) or its attempts at resolving this dispute.

Serious challenge

Minister of Public Enterprises Barbara Hogan on Monday acknowledged Godsell's resignation and appointed Eskom non-executive director Mpho Makwana as acting chair. Makwana heads the Association for Communication and Advertising.

Analysts have expressed concern over the developments at Eskom.

"You will only see the effects of the current spat in about 10 years' time," warned Econometrix economist Azar Jammine. He added that the organisation will now have to deal with the current crisis instead of building infrastructure.

"This will now also have severe implications for Eskom's ability to carry out its infrastructure-building programme," he said.

Lumkile Mondi, chief economist of the government-owned Industrial Development Corporation (IDC), said government's undermining of the Eskom board presented a serious challenge for remaining board members.

"Boards are given the authority to look after the interests of the company, not individuals," said Mondi. "The board at Eskom has been undermined by the shareholder in the interests of individuals," he said.

Investment Solutions economic Chris Hart says this kind of interference is becoming a "familiar pattern" in state-owned enterprises, reports Fin24.com's Troye Lund .

The week's dramatics were akin to the recent power play over a new CEO at Transnet.

Senior ANC members expressed their disapproval (and threatened to take the matter further) when the board failed to shortlist parastatal executive Siyabonga Gama for the job. The position has yet to be filled.

Funding struggles

Ulrich Joubert, an economist at Kruger International, questioned whether Godsell's resignation reflected political pressure, which in turn could affect investors' willingness to fund the utility, already struggling to raise the billions of rands it needs to fuel its expansion.

"International investors don't like political intervention ... if Godsell resigned because of political interference in the managing of the business, then it's bad for Eskom and they will have to pay more to get the funding they need," he said.

Meanwhile, President Jacob Zuma's office refused to comment on Godsell's resignation. It also would not explain what had transpired at a meeting between Godsell and Zuma on Sunday, which followed a gathering of the ANC national executive committee where the matter was also discussed.

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