Union calls for state to speedily form mine company

The National Union of Mineworkers (NUM) has urged the speedy establishment of a state-owned mining company by June next year as part of a larger drive to nationalise the industry as a whole.

The call adds to the momentum building up for establishing such a company, with the government having already completed an audit of all state interests in mining which would be consolidated into it.

The mineworkers union believed the state mining company would be the vehicle for nationalisation, union officials told MPs during public hearings on the project organised by Parliament’s mining portfolio committee on Friday.

Mantashe calms concern on nationalisation

The nationalisation of mines could not willy-nilly become ANC policy by 2012, secretary-general Gwede Mantashe said in the UK on Friday.

"The idea of nationalisation of the mines as raised by the ANCYL will have to go through the ANC's economic transformation committee, the national general council (to be held later this year) and the policy conference before even reaching the national conference in 2012," he said.

Mantashe was addressing the Progressive Business Forum of the ANC in London.

He told the audience that he met European Union ambassadors last week, who had raised concerns over talks of nationalisation.

Malema on nationalisation

ANC Youth League leader Julius Malema says the ruling party will nationalise mines after 2012.

“I know nationalisation is on the agenda of the ANC and it is only I who can tell you that. Nationalisation will be resolved as a policy position of ANC in 2012.

“When it happens, you should not be shocked. We are in the process of policy formulation,” Malema told Parliament yesterday.

President Jacob Zuma has previously said nationalisation was not an ANC policy. Mining Minister Susan Shabangu said in February this year that there would be no nationalisation in her lifetime.

The risks shaping us

FNB Comment, by Cees Bruggermans

Our interest rates are being kept unnecessarily high by massive tax increases imposed through public charging and excessive unionized labour demands, keeping both our inflation and inflation expectations overly elevated.

Vastly better public sector governance and less rigid labour market conditions would have lowered our inflation rate and expectations further by 1%-3% and made the outlook less risky.

That would have warranted a prime rate near 7%-8%. Instead, we are stuck at 10%.

Despite these heavy domestic millstones around our necks, these aren’t the only influences shaping us.

Strong GDP growth for SA in first quarter

GDP growth in South Africa rose to an annualised quarterly 4.6% in Q1 10 from 3.2% the previous quarter. On a y/y basis, GDP grew 1.6% in Q1 10, the first positive y/y growth since Q4 08.

The impressive growth in Q1 was driven largely through the manufacturing, mining, and finance and real estate industries, which contributed more than half of the headline 4.6% q/q rise in Q1. Looking ahead, we expect quarterly economic growth to remain broadly in line with yesterday’s number, with the risk of perhaps some near-term weakness related to the strike action in the transport sector.

Reserve Bank biannual Monetary Policy Review

The global economic recovery has progressed more rapidly than expected in the period since the previous Monetary Policy Review was published in November 2009. However, activity is recovering at varying speeds in different regions, and significant risks and uncertainties continue to threaten global financial markets. Concerns regarding the solvency of a number of countries in the euro area have threatened to transform the initial banking crisis into a sovereign debt crisis, which could have systemic implications for the global economy. The domestic economy, after contracting for three successive quarters, recorded consecutive quarters of positive growth in the second half of 2009, and is expected to sustain this stronger performance in 2010 and 2011.

Inflation has continued to trend downwards in recent months. Headline inflation has moved to within the inflation target range of 3 to 6 per cent for the first time since April 2007 when a year-on-year increase of 5,9 per cent was recorded in October 2009. After again breaching the upper limit of the inflation target range for technical reasons in December 2009 and January 2010, inflation has moved back to within the target range on a sustainable basis since February 2010.

Gauteng Monetary Policy Forum

At the Monetary Policy Forum (MPF) yesterday, Reserve Bank Governor Marcus said that the global recovery had progressed faster than anticipated. However, the Governor highlighted that developments in Europe posed a major risk to the recovery. She noted that the world was ‘in for a difficult time’ and stressed the importance of co-ordinated action to deal effectively with the crisis.

Marcus said that it was too early to assess the impact of Europe’s troubles on South African growth. She added that the effect on inflation was likely to be modest, as the weaker currency would be offset by lower commodity prices.

The audience asked a number of questions on the rand and whether or not the Bank would intervene to weaken the currency, due to calls by both labour unions and business that the strong rand was harming competitiveness.

State’s small business body writes off millions

The government’s wholesale small business promotion agency Khula* had written off R220,6m of its loans advanced to its intermediary clients and partners between 2003-04 and 2009-10, Trade and Industry Minister Rob Davies said this week.

This represented 13% of total disbursements of R1,68bn over the period, during which the average provision for bad debts was 16,6%.

The repayment level showed a decline last year to 74% from 83% the previous year.

Davies was asked in a parliamentary question by Inkatha Freedom Front MP Seeng Lebenya-Ntanzi to give details of the repayment record of small and medium-sized enterprises (SMEs) loaned money by institutions falling under his department, which include the National Empowerment Fund, the South African Micro-Finance Apex Fund, Khula and the Industrial Development Corporation (IDC).

SA improves global competitiveness

According to a survey from the World Competitiveness Yearbook, which is published by the Swiss-based Institute of Management Development (IMD), South Africa has climbed up in its competitive rankings in 2010 to 44th in the world following its 2009 ranking of 48th.

The survey linked the improvement in SA’s competitiveness to “the increased level of portfolio investment assets and direct investment stocks moving inward, as investors diverge to emerging markets that were not too exposed to the financial crisis”.

According to daily foreign bond and equity flows SA has already seen around ZAR50bn in portfolio flows year-to-date as compared to the ZAR39bn in inflows in the corresponding period last year.

The social consequences of the crisis will remain a long-lasting worry. Unemployment has risen to 24% in South Africa (44) and, in Spain, youth unemployment culminates at 38%; it will surpass 40% in 2010!

SA Reserve Bank Monetary Policy Forums

The South African Reserve Bank (SARB) will be hosting the first round of regional Monetary Policy Forum (MPF) meetings in May 2010.

Monetary policy has an impact on everybody. The main objective of the MPF meetings is to enhance the transparency of the Bank’s monetary policy decision-making process and accountability to the public. The meetings provide a platform for public discussions on monetary policy and general economic developments.

Have your say on the South African Reserve Bank Amendment Bill

The South African Reserve Bank Amendment Bill [B10-2010]

Submissions and Hearings

 The Standing Committee on Finance invites shareholders and interested parties to submit written submissions on the South African Reserve Bank Amendment Bill [B10-2010].

The Bill seeks to amend the South African Reserve Bank Act, 1989 (Act 90 of 1989) in order to achieve the following objectives:

• To amend the South African Reserve Bank Act, 1989, as to provide for the amendment of certain definitions, and the insertion of new definitions and the deletion of a definition;

Impatient Manuel berates the messenger

Perhaps it is Planning Minister Trevor Manuel's advancing age that has made him increasingly tetchy, more so than he was in his glory days as finance minister.

Ever since the umbrella incident - he is alleged to have hit a female journalist with an umbrella at the watershed ANC Polokwane conference in 2007 - his relationship with the media has been on an ever more slippery slope.

Perhaps it tracks his declining fortunes in the ruling party. After having been the most popular candidate for the ANC's national executive committee in 2002, he subsequently slipped to 57th in the ranking - out of 60 elected members - at the Polokwane conference.

Once again this week, during a briefing on the National Planning Commission appointed by President Jacob Zuma after a year of preparation, he went off. In a clear case of blaming the messenger, it was Anna Majavu's turn to be savaged.

COSATU on interest rates

The Congress of South African Trade Unions deplores the Reserve Bank Monetary Policy Committee’s decision not to cut the repo rate but keep it at its current high level. The MPC has yet again today missed an opportunity to give a boost to economic growth and strike a blow for job creation.

President Zuma in parliament yesterday warmly welcomed the joint statement by manufacturers and the three trade union federations, Cosatu, Fedusa and Nactu, on industrial economic policy interventions needed to create decent jobs, which was signed two days ago.

That joint declaration identified one of the most serious problems facing our economy as that the unavailability of finance, and the exorbitant level of lending rates by the financial sector, which make borrowing prohibitively expensive.

SARB MPC decision on the repo rate

The [SA] Monetary Policy Committee decided to leave the repo rate unchanged at 6,5 per cent per year.

SARB Monetary policy stance: The assessment of the Monetary Policy Committee is that inflation is likely to remain within the inflation target range over the forecast period, and that the economy is expected to continue on a recovery path. The risks to the inflation forecast are seen to be more evenly balanced than at the previous meeting of the MPC. The main risks to the inflation outlook emanate from administered price developments and from the risks emanating from the global economy. The domestic growth outlook will continue to be affected by the global developments. The MPC will continue to monitor these developments closely.

For these reasons, the MPC deems it appropriate to maintain the current stance of monetary policy. Accordingly the repurchase rate remains unchanged at 6,5 per cent per annum.

Pitching the Rand

FNB Comment, by Cees Bruggermans

There is much clamouring for a weaker Rand.

Indeed, why stop at fair value (reckoned at 8.50:$) if you can get 9:$ or 10.50:$? Why not go straight to 15:$ and feel really rich (for a while, at least, until you want to replace the car, buy a tractor, drive them or do other exotic things with imports, like generate electricity and stuff).

There is also much clamouring for higher wages.

Marcus calls for SARB amendment bill to be fast-tracked

Following Finance Minister Pravin Gordhan’s comments last week that the government is to amend the country’s Reserve Bank Act, SARB Governor Gill Marcus yesterday urged the country’s Parliament to “fast track” the South African Reserve Bank Amendment Bill.

This comes amid calls for the nationalisation of the SARB by some of its board members. Marcus said that she would “appreciate it” if  the bill were passed ahead of the Bank’s  annual general meeting, which is scheduled for September, and asked for government to hold public hearings on the bill in “perhaps a slightly shorter time than is normally done”.

Marcus noted that there would be three vacancies that need to be filled at this meeting, and therefore, she would like the process to be governed by the new legislation.

NPC should not pander to the government

President Jacob Zuma’s endorsement of the National Planning Commission’s independence has emboldened Planning Minister Trevor Manuel.

Manuel said yesterday he would be involved in the budgeting process along with the Treasury and Finance Minister Pravin Gordhan, and he stressed that planning and budgeting always go together.

Manuel’s comment suggests he is claiming territory from Economic Development Minister Ebrahim Patel, after persistent reports of a turf battle over the past year.

Briefing the media ahead of the Presidency’s budget vote, Manuel, in response to a question, stressed that the commission was appointed by the president and had the full support of the entire executive.

Factory output growth puts economy on track

Annual growth in factory output outpaced expectations in March, suggesting the recovery in the supply-side of the economy is on track and backing the case to leave interest rates unchanged.

Statistics SA said yesterday manufacturing output rose by 6,3percent year-on-year in volume terms in March, accelerating from 2,7percent in February, much higher than the 2,9percent expected by economists in a Reuters poll.

On a monthly basis, factory production in volume terms rose by a seasonally adjusted 2,6percent in March and increased by 1,5percent in the first quarter of 2010 compared with the fourth quarter of 2009.

NPC endorses members from business

The newly appointed National Planning Commission (NPC) got down to business yesterday, playing down complaints that business is over-represented on the 25-member panel.

When the list of commissioners was announced 12 days ago, the African National Congress’s (ANC’s) alliance partners, along with the opposition Independent Democrats, said the appointments were mainly associated with the business sector.

But NPC chairman Trevor Manuel said there was no merit in “compartmentalising” commissioners, who were appointed in their individual capacities. The commissioners, who convened for the first time on Monday, had said they did not want to be “pigeonholed” before they even started work.

Vavi hits out at strong rand

The rand is far too strong, Cosatu general- secretary Zwelinzima Vavi said yesterday.

Vavi said this during the launch of a joint declaration by the country’s three major trade union federations and a grouping of important South African manufacturers in Johannesburg to create decent jobs.

“The declaration calls for interventions to ensure an appropriately valued, competitive and stable currency,” Vavi said.

A competitive currency would allow manufacturing to compete on a similar footing to other developing countries, he said.

SA’s labour unions and businesses call for a competitive exchange rate

Yesterday South Africa’s three major trade union federations and a number of large local manufacturers signed a joint declaration calling for “interventions to ensure an appropriately valued, competitive and stable currency”. Congress of South African Trade Unions Secretary General Zwelinzima Vavi said yesterday that a competitive currency was needed in South Africa in order to allow domestic manufacturers to compete on a similar footing to that of other countries.

Vavi also called for a further reduction in real interest rates along with the introduction of concessional financing for productive investment.

It remains an open question as to what the “correct” level for the currency that would satisfy both exporter and importer concerns would be.

More on the SARB shareholder muddle

Although it is said that shareholders in the SA Reserve Bank have no say in the operations of the central bank or monetary policy some shareholders use their holdings to disrupt Reserve Bank general meetings, using time-wasting tactics to press their demands, which the central bank and government say is, ultimately, to ensure bigger payouts.

One such shareholder, Mario Pretorius, pictured right, found himself in the limelight last week when minister of finance Pravin Gordhan announced that he would be piloting a bill through parliament designed to limit the influence of private shareholders over the central bank.

"Certain shareholders might be circumventing the law and accumulating the shares to influence decision-making at the annual general meetings of the board, and to improperly interfere in the operations of the bank itself," Gordhan said.

Important elements for inflation targeting for emerging economies

The fifth chapter of a forthcoming monograph from the IMF entitled On Implementing Full-Fledged Inflation-Targeting Regimes: Saying What You Do and Doing What You Say, has been issued as a Working Paper.

It examines whether certain conditions have to be met before emerging economies can adopt an inflation-targeting regime and provides some empirical evidence on the matter. The issues analyzed are:

• The priority of inflation targeting over other goals, 
• the absence of fiscal dominance, central bank independence, 
• the degree of control over the policy interest rate, 
• a sound methodology for forecasting, and 
• the soundness of financial institutions and markets, and resilience to changes in exchange rates and interest rates.
  

State ready to take on Reserve Bank shareholders

The government expects private shareholders unhappy with proposed changes to the Reserve Bank Act to challenge them in court, but it is confident that it would win any litigation, a Cabinet spokesman said yesterday.

Finance Minister Pravin Gordhan announced the proposed amendments on Monday. They tighten the rules on shareholding in the central bank in a bid , the government says, to stop the Bank's independence being undermined by private shareholders whom the government claims are motivated solely by profit to the detriment of the national interest.

Chief government spokesman Themba Maseko said yesterday: "Our view is that the process we are implementing is fully in line with existing procedures and regulations."

COSATU statement on the National Planning Commission

The Congress of South African trade Unions has noted the names of the people appointed to serve on the National Planning Commission and hopes that they will immediately start to tackle the many serious challenges that the country faces.

COSATU welcomes the appointment of three of the people whom it nominated – Chris Malikane, Vivienne Taylor and Karl von Holdt – and is confident that they will vigorously fight for policies in the interests of the workers and poor South Africans.

We welcome several others who have a good record of supporting progressive policies.

COSATU is however concerned at the over-representation of business people, who constitute nearly half of the NPC.

SACP statement on the National Planning Commission

The SACP welcomes the announcement made by the President of the Republic last week establishing the National Planning Commission.

We are committed to work with the planning commission in a dynamic way to buttress its activities with popular mass participation on what should be the long term plan of our country on key challenges facing South Africa.

We particularly welcome the appointment of South Africans, a most welcome move away from our policy direction being determined by ‘Harvard Panels’ as if South Africa does not have its own intellectual resources. However, we obviously would have liked to see more names of people coming from the ranks of the working class, and we are concerned that people associated with business are over-represented in the commission.

National planning commission should be independent

It is encouraging to note that the much-anticipated appointment of the 25-member national planning commission has finally happened without any major controversy.

Of course there have been complaints. For instance, Cosatu has said it was concerned that the new body is dominated by pro-business experts while some in business fear that it might be "too left-leaning".

But that was to be expected because this institution - which will be responsible for formulating the national vision and long-term planning - is highly contested by competing groups.

The fact of the matter is that - after months of dithering and bickering over the powers of the commission - the body is finally in place.

Bill limits SARB shareholders

Cabinet has approved the SA Reserve Bank Amendment Bill that will limit shareholders' activities.

This followed concerns that activities by private stakeholders were attempts to undermine the bank's independence, Finance Minister Pravin Gordhan told a media briefing in Pretoria on Monday.

"The governor [Gill Marcus] has concerns about the way in which private stakeholders have been conducting themselves," Gordhan said.

Private stakeholders had recently voiced concerns about their involvement in key decisions.

"There are no rights as far as we are concerned that the shareholders have or think they have," said Gordhan.

Who is in charge of economic policy?

The country still does not know who is in charge of economic policy, despite important announcements by President Jacob Zuma on Friday.

Zuma said that ministers were in the process of signing performance agreements with the presidency, which would be "cascaded down to deputies and directors-general to ensure the entire government reads from one script".

At the same time he announced the names of the members of the National Planning Commission (NPC), chaired by Trevor Manuel, the Minister in the Presidency responsible for national planning.

National Planning Commission members

ANC heavyweight and businessman Cyril Ramaphosa, and former Eskom chairman Bobby Godsell were appointed to the National Planning Commission on Friday.

Also on the team announced by President Jacob Zuma are ANC national executive committee member Joel Netshitenzhe and Business Unity South Africa chief executive officer Jerry Vilakazi.

Making the announcement in Pretoria, Zuma said the commission would be chaired by Minister in the Presidency: National Planning Commission Trevor Manuel with Ramaphosa as his deputy.

The 24 people on the team have expertise in areas including finance, industry, telecommunications, biotechnology, energy, education, food security and climate change.

According to the presidency, the NPC will be responsible for developing a draft long-term vision and strategic plan for South Africa.