Should ZA Impose Visa Restrictions on the Brits?

Britain imposes visa restrictions on SA visitors, and SA is trying to get these lifted. Some are suggesting we should increase the pressure by imposing visa requirement on visitors from the UK. What do our experts think?

Mike Schussler from economists.co.za:

Generally, I think visa restrictions are silly on both sides. But for SA, we may lose quite a few tourists in the process and that is not something we would like to happen. While SA gets more travellers from Africa the fact is developed country tourists generally have more money to spend and they are much more likely to stay in hotels and in guest houses. They are also more likely to spend money at car rental agencies, wine farms, restaurants and so on. These are the tourists whose dollars or pounds create jobs. With our lack of job creation over the last 25 years, this is not something we can afford to make difficult. SA must rise above political point-scoring with the UK. We must learn that job creation and maintenance must supersede everything else. Who wants to go to the UK and not feel comfortable inviting people back to visit SA?

Mario Pretorius from Telemasters:

The visa saga with the UK reflects the corruption of our passport authorities who sold enough ‘green mambas’ to foreigners needing free access to the Queen’s country. Unless such passports are found & withdrawn, multiple IDs are eradicated, foreign purchases of ID books are eliminated, and the fraudulent withdrawn, there remains an army of wannabe Brits waiting to hurdle the visa barrier. On the other hand the UK seems bent on filling up its Sceptred Isle with new arrivals; this could be a belated Boer War ‘take them’? Switzerland is stepping out of Schengen to protect its own; this indicates the trend of an integrated world economy with Apartheid-type borders.

Leon Louw of the Free Market Foundation:

Let me start by saying that in response to the cost and effort I’m told about for UK visas, it got me to decide when it was introduced that I won’t go there again – unless something serious forces me to do so. In common parlance, it pisses me off. That personal note aside, the natural knee-jerk reaction to other people’s bad behaviour is usually to mimic them. That’s really odd; they do something you think is wrong, and you respond by doing the same thing. As if 2 wrongs make a right ….the old cutting off your nose (should that be "knows"?) to spite your face conundrum. Tit-for-tat is inherently paradoxical. You start by condemning someone’s conduct, and then you respond by doing the same thing. In other words, you do what you condemn. Sometimes there seems to be a good case for it, to retaliate, for instance, by punching someone who punches you. Amongst alternatives are to turn the other cheek, to turn your back, to flee, to pacify, to seek help etc. Someone joked that the Bible requires turning the other cheek and if they smack you again, then you clobber them. Anyhow, an eye-for-an-eye might be right in some contexts, but seems generally a bad idea, especially in international relations. We see this knee-jerk reaction in all contexts of human interaction. In international trade — which is my turf — it manifests itself as tariff wars. You impose tariffs on my products, so I impose tariffs on yours. The alternative (eg: Hong Kong, Switzerland) is to say "Ah well, toughies, your citizens will not be getting our great values, whereas ours will be getting yours, especially all the extra-cheap stuff you subsidise and dump, which adds insult to injury for your citizens, who end up subsidising ours. Bravo! Keep it up. Meanwhile, the rest of the world and we continue benefiting from mutually beneficial exchange. Your loss. So, with the UK, what I would do is let it be known that we condemn their action, that they make it clear they do not want us visiting the UK, but that we are not so petty as to do the same — which would be demeaning and submissive, letting them corrupt us. Instead we welcome Brits: please visit folks, we will not be so petty, xenophobic and short-sighted as to impose costs and obstacles in your path. We can actually turn their delinquency to our advantage. I would go further, but then I am not the master of diplomacy, and have our President or Minister say to South Africans "Britain makes it clear they don’t want us. We encourage you to visit and trade with friendly countries."

Neren Rau from Sacci:

I believe that we would be better placed to explore why we experience visa restrictions into the UK and responding/ addressing concerns/ issues if possible. Raising inbound visa restrictions would have a dampening effect on inbound tourism and this sector is one of the few strong performing sectors in SA right now.

Emile Myburgh of Emile Myburgh Attorneys:

I think it would be a good idea. At the time when the UK imposed visas on South African passport holders, they also wanted to impose visa requirements on Brazilians. Brazil has a strict reciprocity principle which means that Brazil requires visas from citizens of those countries that require visas from Brazilians. Hence, for example, US citizens need visas to visit Brazil, but South Africans don’t. When Brazil advised the UK that they would impose the reciprocity principle on UK citizens visiting Brazil, the UK backed off. One can, of course, argue that Brazil has more clout than SA, but I think we can gain from such a strict policy of reciprocity. The argument that SA stands to lose more by requiring visas from UK or Europeans visiting us, is not a valid argument. People that need or want to come here, will still come here. There are plenty of examples (like Angola) of countries with strict visa requirements for all foreigners, and that is not deterring anyone from going there.

Conclusion:

Emile Myburgh makes a strong case, but I am not fully convinced. This is not a battle of wills between equals. Britain has far more rigid and respected controls and safeguards than we do in SA, and until we can convince the Brits that we are responsible and can be trusted to control the fraudulent issuing of travel documents, they may be right to insist on the visa restriction. Were we to retaliate, we would hit tourism, which would be self-defeating. Improve the image of SA, and then we will have something with which to bargain.

Tweet of the day:

Puns (@omgthatspunny (https://twitter.com/omgthatspunny) ): When I asked the man how he became a ditch-digger, he said he just fell into it

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Pick up in Manufacturing

July’s manufacturing production number rose by 5.4%, year on year, a big jump on the June number of 0.5%. Is this sustainable? We asked our experts.

Sizwe Nxedlana from FNB.
The index was boosted by strong growth in the production of: motor vehicles and parts (9.9% y/y), machinery and metal products (+7.9% y/y), glass and non-metallic mineral products (7.2% y/y) as well as food and beverages (6.1% y/y). On a month-on-month basis manufacturing production grew by 5%. We are encouraged to see that manufacturing output grew ahead of expectations in July and the purchasing managers’ index for August jumped to its highest level in 6 years. However, it is likely that near term manufacturing sector growth will be constrained by the striking in the automotive and components industry that occurred in August and is currently ongoing.

Nedbank’s Economic Unit:
The annual growth rate was mainly driven by the ‘basic iron and steel, non-ferrous metal products, metal products and machinery’ division which contributed 1,6 percentage points.
On a seasonally adjusted basis production rose by 5,0 % m-o-m. For the three months to July, manufacturing production increased by 2,2 % q-o-q mainly as a result of the ‘basic iron and steel, non-ferrous metal products, metal products and machinery’ division which accounted for 1,3 percentage points of the growth.
The seasonally adjusted Kagiso PMI showed some signs of improvement in August, rising to its highest level since August 2007 and staying above the key 50 level for over five months. Despite this, labour-related production disruptions are likely to have a negative impact on output growth in the short term. The sector will also continue to face subdued demand conditions. In the large export-orientated industries, output growth will be contained by the weak growth in the Eurozone, a more measured Chinese economy and weaker international commodity prices. However, the weaker rand will temporarily offset some of the pressures. At the same time, cost pressures will remain elevated, with high electricity costs, rising unit labour costs and expensive transport and logistics. In the inwardly-focused industries, demand conditions will also be broadly softer as household spending moderates and fixed investment activity remains weak.
Despite the better-than-expected expansion recorded in July, manufacturing production and exports are likely to remain subdued, limiting the pace of overall economic activity to around a modest 2 %. While growth remains contained and the risk to the downside, inflation is rising with the risk to the upside given the strife with labour and a weak and vulnerable rand. Consequently, the MPC will probably keep rates on hold until the second half of 2014.

Conclusion:
This was welcome data, but the strike season is not yet over, and we must remain cautious.

Tweet of the Day:

Puns (@omgthatspunny): When William joined the army he disliked the phrase ‘fire at will’

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Is Nigeria Set to Overtake ZA to be the Number One Investment Destination in Africa?

Rand Merchant Bank (RMB) has produced its third annual report: ‘Where to Invest in Africa: A guide to corporate investment.’ This shows that Nigeria has climbed to second place, behind South Africa, as the most attractive investment destination, with the suggestion that Nigeria could soon overtake ZA to fill the number one spot. ZA Confidential spoke to RMB’s Africa Analyst Nema Ramkhelawan-Bhana to learn more…..

ZAC: SA remains the most attractive investment destination in Africa. What is it that keeps us in 1st place?
NRB: South Africa is still the most attractive country in Africa on account of its considerable market size and moderately good operating environment. South Africa remains the dominant force on the continent. At US$608bn, it is 8% larger than Egypt, its closest rival in PPP terms, and comprises 17% of Africa’s total purchasing power. Its affiliation to SACU is also advantageous as the Customs Union is credited with bettering the living standards of its member countries by facilitating trade within and outside the area. Despite a worsening in its growth outlook, South Africa is ranked third in our supplementary regional methodology, underscoring its importance as a gateway into Africa. Its scoring remains relatively the same on both measures of attractiveness, reflecting its trade and administrative dominance within SADC and the SACU.

ZAC: You say Nigeria is snapping at our heels…. What are they doing right and we doing wrong?
NRB: Nigeria has overtaken Egypt to second position in our rankings. This strong showing comes from expectations of continued rapid economic growth. Based on the pace of improvement in the attractiveness score, it is possible that Nigeria will overtake South Africa within the next two to four years. This could happen sooner if the revisions to GDP, that are currently underway, result in an upward adjustment in the size of the Nigerian economy. Of the top 10 in Africa, Nigeria has the largest improvement in its attractiveness score. South Africa, a giant in terms of economic size, is likely to register sluggish growth (3.2% according to the IMF’s estimates) in comparison to Nigeria, offering substantial market size but not exceptionally quick market growth. Despite being at the forefront of our investment rankings, South Africa trails its larger African peers, recording an uninspiring average growth rate of 1.9% over the last four years (2009 – 2012). Confidence remains depressed, evident in a decline in business confidence and a moderation in private sector fixed investment growth in 2Q13. Concerns about labour market developments and political uncertainty continue to weigh on the private sector’s willingness to invest. This unease will also translate into a moderation in employment growth at a time when households are already showing strain, as seen in slowing retail sales growth and rising bad debts.

ZAC: Is SA’s BRICS membership a factor? Does it place it above our neighbours, or is it something that is of benefit to the region as a whole?
NRB: Our study does not take South Africa’s BRICS membership into consideration but the socio-political, trade and development opportunities arising from the grouping is certainly beneficial to South Africa as well as its regional affiliates.

ZAC: Many Africa economies are growing far faster than those in the developed world. Is this going to suck in increased investment?
NRB: Africa’s rapid expansion over the last decade is a sound justification for investment, especially when nominal growth rates are taken as a measure of commercial return. We anticipate continued growth in FDI especially if we consider that seven of the world’s top 10 fastest growing economies over the next six years will emerge from Africa. The region as a whole is forecast to grow by 5.8% in 2013 providing vast opportunities for investment.

ZAC: What would you like to see changed to bring more investment into Africa?
NRB: According to the World Economic Forum, access to financing; corruption and inadequate infrastructure are still the top three barriers to doing business in Sub-Saharan Africa, which need to be overcome to facilitate greater investment. Africa is at a critical moment in time when it needs to boost industrial development and curb its infrastructure deficit if it is to transform its growth spurt into a sustainable trend.

ZAC: Traditionally, a lot of investment into Africa would have been into the resources sector. What are the sectors which will attract the most investment in the future?
NRB: While oil and mining activities continue to enhance the growth prospects of countries which are richly endowed with mineral resources, non-resource sectors are also expanding, although from a low base. In last year’s edition, we graphically illustrated where FirstRand’s clients (around 800 surveyed) are heading into Africa and how their footprint has grown. It is incredible to see the extent and pace of expansion into the continent. We extended the analysis further and found it interesting that half of FirstRand’s clients in our subsidiary countries are retailers or automotive and logistics companies. Local logistics companies deliver consumer goods, and transport minerals and soft commodities either for processing or export. This is mainly due to improving infrastructure and supply chains borne of rising consumer demand. Financial and business services are increasingly being demanded, while the service companies are expected to follow suit. This reflects the gradual transition from resource to consumer driven investment.

Tweets of the day:
Puns (@omgthatspunny): I didn’t like my beard at first. Then it grew on me.
Puns (@omgthatspunny): I know a guy who’s addicted to brake fluid. He says he can stop any time.
Puns (@omgthatspunny): A man walks into a zoo, and the only animal there is a dog. It was a Shitzu.

ZA Confidential is e-mailed to subscribers. For details on subscriptions, please contact zaconfidential@gmail.com

ZA Confidential Reader Attacks Raymond Parsons Over NDP

Reader feedback is vital to any publication, and ZA Confidential has received a robust rebuttal of yesterday’s Q&A with economist and author Professor Raymond Parsons from businessman Mario Pretorius, who is CEO of Telemasters. Here is his letter:

Sir,
I have never given Professor Raymond Parsons much credence, but he has destroyed the little bit of sanity I credit him with. What a suck-up job to the ANC! So ‘Business’ buys into the hogwash shopping-list of ideas to get out of low growth? Absolute rubbish. This tome of an idea is as useless as it is weighty for almost every reason in the economic book that Professor Raymond Parsons hopefully has on its shelf.
For starters, we are exactly where Britain was in 1963 on the eve of their Labour blowout. We are in the same currency trap as India. There is no political will to back business. Entrepreneurship is a graveyard. SARS is bullying for every cent it can. 94% of the enormous government debt that is increasing daily is sourced out of the local banking system and away from business and consumers.
It would take a good 400 pages to illustrate the absence of the most rudimentary understanding of this government regarding economic growth, and the majority of that would be to out the no-clothes emperors of (Ministers) Manuel and Gordhan. I know of no single successful prosecution under the Prevention and Combating of Corrupt Activities Act – although we are drowning in corruption from the bottom to the top, the list of books detailing this from ‘’Zuma Exposed’’ to ‘’Tincture’’.
Not a single basic premise that underpins their PLAN is correct – from the SARB having made its 3rd consecutive loss (4th since inception) to the hare-brained ideas of ‘offsets’ and now nuclear power, there is a single and thick murky thread of real Kakistocracy running through those purporting to be our servants. A crushing future awaits us.
Mario Pretorius.

For those who may have missed it, here is the Q&A with Professor Raymond Parsons from yesterday’s ZA Confidential:

One of our top economists, Professor Raymond Parsons, has written a new book. Entitled ‘Zumanomics Revisited’, it is a sequel to his earlier ‘Zumanomics’. Raymond looks at the economic landscape up to 2030, and analyses what needs to be done to put the ZA economy on the right track. We spoke to him.

ZAC: You say the NDP "may be South Africa’s last opportunity to arrest the drift into what would be a low growth trap for the economy." But does the NDP have the degree of support within government, and the business community to be taken forward?
PRP. While there is broad support from several stakeholders, including business, for the NDP framework, it is not yet as strong and widespread as it should be, given its importance to where SA wants to be by 2030. Yet ANC Deputy-President Cyril Ramaphosa reiterated this week that the NDP ‘was like a moving caravan and those who did not jump aboard risked being left behind’. The extent to which the NDP will be more successful than its predecessors will depend on how well both public and private sector actions are gradually aligned to its framework and the degree to which it gains traction in the community at large. That is why the NDP puts a great deal of emphasis on the role of an ‘active citizenry’ in its implementation and for that to be effective it needs to be both a ‘bottom up’ as well as a ‘top down’ process. People will support what they have helped to create, which is why the NDP needs to gain more traction at grassroots level.

ZAC: Is there time? How do you assess the danger of social strife as joblessness remains so high in ZA?
PRP: The NDP was crafted precisely because it was felt that, until SA could develop a shared vision of the future, it would not be able to gain the time needed to more successfully address the triple challenges of unemployment, poverty and inequality. It has rightly been said that SA is not so much at a crossroad, but rather at a ‘T-junction’ where it must make the right choices to achieve its economic potential or face growing strife. Nothing is inevitable. Rising tides can be turned if in SA, with the help of the NDP, we can get both our economics and politics right. The remedies are at hand, provided there is a willingness in both the public and private sectors to take the difficult decisions needed sooner rather than later. The latest Global Competitiveness Survey by the World Economic Forum again also suggests that the areas in which SA received the lowest rankings, such education and labour market efficiency, could presage further declines in competitiveness if not addressed soon. So time is not unlimited.

ZAC: You stress the importance of implementation. Yet we are not very good at that, are we?
PRP: The issue of poor delivery has been the Achilles Heel of many previous growth and development programmes, and explains much of the social unrest around lack of delivery, especially at local level. Hence the emphasis placed in the NDP on building State capacity at different levels and to ‘professionalize’ the civil service to a far greater extent. Economic literature has suggested that it is state strength, rather than state scope, which is important for long-term growth. This also creates space to expand collaboration between the public and private sectors to improve delivery through public-private sector partnerships and similar measures. For example, we need to see greater private sector involvement in infrastructure and in energy co-generation to increase the efficiency of delivery. We should bother less about concepts such as an ‘enabling’ or ‘developmental’ state, and emphasise more the need for a ‘delivery state’ if we want to meet the challenge of implementation. ‘Does it really matter whether the cat is black or white, as long as it catches the mice?’, says a Chinese politician.

ZAC: How damaging is the current lack of unity within organised business at a time when important messages need to be articulated to government on labour legislation, taxes, the investment climate and other key issues?
PRP: ‘Unity is strength’ is the well known mantra, and current circumstances highlight the extent to which insufficient unity in both business and labour can hamper or undermine broader goals. Nonetheless, although the lack of unity in organised business is regrettable, it has not prevented organisations like Business Unity South Africa and the Black Business Council from cooperating on issues of mutual concern, such as in Nedlac. So it is still possible for organised business, even though divided to some extent, to maintain its sphere of influence on certain issues. Ideally, there needs to be more rationalization and de-racialisation in organised business, to maximise its impact – and that should be the ultimate goal. In the meantime there needs to be pragmatic cooperation among those business interests to ensure that overall the voice of business is still heard effectively on key matters like the NDP.

ZAC: Your book is entitled ‘Zumanomics Revisited.’ How much does Jacob Zuma understand economics? And how damaging is it that there appear to be strong disagreements among his ministers over the way forward?
PRP: We should not expect Presidents or Prime Ministers to be economists. ‘Experts on tap, not on top’ should be the approach here. A President needs to surround himself with advisers who provide the expert input upon which he and his Cabinet need to make their decisions. I have suggested that, if it is decided that the National Planning Commission will not continue beyond its current five year term, President Zuma might consider a structure like the US President’s Council of Economic Advisers, which gives the President independent high-level economic advice. It will be essential for the success of the NDP if President Zuma, when re-elected, appoints a Cabinet team which is fully committed to making a success of the plan. Not only government, labour and business need to find better ways to work together, but collective responsibility at cabinet level is also necessary if the NDP is to be coherently implemented in the period ahead.

ZAC: You say "good institutions can erode under the weight of corruption, racism, careerism and patronage." Is government not then seriously eroded?
PRP: The thrust of the NDP is precisely on how we can strengthen our institutions in ways that will create an economy that will be bigger, stronger and better by 2030. This covers both the public and private sectors but the emphasis in the NDP on better governance is unmistakeable. Corruption is recognized as one of major concerns, which requires to be jointly and effectively tackled by government and business. The challenge is to build on our strengths and frankly address those institutional and structural weaknesses which threaten to push SA into a low growth trap.

ZAC: The ANC is likely to win the election next year, with JZ at its helm. How will you judge his second term?
PRP: It is when Presidents are re-elected to their second term that they begin to think about their legacy. Some observers believe that President Zuma is not really interested in his legacy after 2019. It would be surprising and unusual if that turned out to be the case. After all, it was President Zuma who appointed the National Planning Commission in 2010 and asked them to come up with a 2030 vision for SA. Although the NDP now belongs to SA as a whole, he has a big vested interest in its success. It will be during President Zuma ‘s second term that he will need to provide the political leadership needed to push the implementation of the NDP. By the time he steps down in 2019, when SA should be about one-third of the way to 2030, he will want to be able to say: “Look, the economy is beginning to turn around and we have been able to make a dent in unemployment, poverty and inequality”. His eventual legacy at the end of two terms as President of SA will lie largely in the state of the economy and it is by that yardstick that he is likely to be judged.

Conclusion:
Let the debate continue. A lot is at stake.

Tweets of the day:
Puns (@omgthatspunny): I have an eating disorder; I’m about to eat dis order of fries, dis order of wings, and dis order of nuggets.
Famous-Quote.net (@famousquotenet): Be wary of strong drink. It can make you shoot at tax collectors… and miss. – Robert Heinlein

ZA Confidential is e-mailed to subscribers. For details on subscriptions, please contact zaconfidential@gmail.com

ZA Confidential Speaks to Professor Raymond Parsons About his New Book: ‘Zumanomics Revisited’

One of our top economists, Professor Raymond Parsons, has written a new book. Entitled ‘Zumanomics Revisited’, it is a sequel to his earlier ‘Zumanomics’. Raymond looks at the economic landscape up to 2030, and analyses what needs to be done to put the ZA economy on the right track. We spoke to him.

ZAC: You say the NDP "may be South Africa’s last opportunity to arrest the drift into what would be a low growth trap for the economy." But does the NDP have the degree of support within government, and the business community to be taken forward?
PRP. While there is broad support from several stakeholders, including business, for the NDP framework, it is not yet as strong and widespread as it should be, given its importance to where SA wants to be by 2030. Yet ANC Deputy-President Cyril Ramaphosa reiterated this week that the NDP ‘was like a moving caravan and those who did not jump aboard risked being left behind’. The extent to which the NDP will be more successful than its predecessors will depend on how well both public and private sector actions are gradually aligned to its framework and the degree to which it gains traction in the community at large. That is why the NDP puts a great deal of emphasis on the role of an ‘active citizenry’ in its implementation and for that to be effective it needs to be both a ‘bottom up’ as well as a ‘top down’ process. People will support what they have helped to create, which is why the NDP needs to gain more traction at grassroots level.

ZAC: Is there time? How do you assess the danger of social strife as joblessness remains so high in ZA?
PRP: The NDP was crafted precisely because it was felt that, until SA could develop a shared vision of the future, it would not be able to gain the time needed to more successfully address the triple challenges of unemployment, poverty and inequality. It has rightly been said that SA is not so much at a crossroad, but rather at a ‘T-junction’ where it must make the right choices to achieve its economic potential or face growing strife. Nothing is inevitable. Rising tides can be turned if in SA, with the help of the NDP, we can get both our economics and politics right. The remedies are at hand, provided there is a willingness in both the public and private sectors to take the difficult decisions needed sooner rather than later. The latest Global Competitiveness Survey by the World Economic Forum again also suggests that the areas in which SA received the lowest rankings, such education and labour market efficiency, could presage further declines in competitiveness if not addressed soon. So time is not unlimited.

ZAC: You stress the importance of implementation. Yet we are not very good at that, are we?
PRP: The issue of poor delivery has been the Achilles Heel of many previous growth and development programmes, and explains much of the social unrest around lack of delivery, especially at local level. Hence the emphasis placed in the NDP on building State capacity at different levels and to ‘professionalize’ the civil service to a far greater extent. Economic literature has suggested that it is state strength, rather than state scope, which is important for long-term growth. This also creates space to expand collaboration between the public and private sectors to improve delivery through public-private sector partnerships and similar measures. For example, we need to see greater private sector involvement in infrastructure and in energy co-generation to increase the efficiency of delivery. We should bother less about concepts such as an ‘enabling’ or ‘developmental’ state, and emphasise more the need for a ‘delivery state’ if we want to meet the challenge of implementation. ‘Does it really matter whether the cat is black or white, as long as it catches the mice?’, says a Chinese politician.

ZAC: How damaging is the current lack of unity within organised business at a time when important messages need to be articulated to government on labour legislation, taxes, the investment climate and other key issues?
PRP: ‘Unity is strength’ is the well known mantra, and current circumstances highlight the extent to which insufficient unity in both business and labour can hamper or undermine broader goals. Nonetheless, although the lack of unity in organised business is regrettable, it has not prevented organisations like Business Unity South Africa and the Black Business Council from cooperating on issues of mutual concern, such as in Nedlac. So it is still possible for organised business, even though divided to some extent, to maintain its sphere of influence on certain issues. Ideally, there needs to be more rationalization and de-racialisation in organised business, to maximise its impact – and that should be the ultimate goal. In the meantime there needs to be pragmatic cooperation among those business interests to ensure that overall the voice of business is still heard effectively on key matters like the NDP.

ZAC: Your book is entitled ‘Zumanomics Revisited.’ How much does Jacob Zuma understand economics? And how damaging is it that there appear to be strong disagreements among his ministers over the way forward?
PRP: We should not expect Presidents or Prime Ministers to be economists. ‘Experts on tap, not on top’ should be the approach here. A President needs to surround himself with advisers who provide the expert input upon which he and his Cabinet need to make their decisions. I have suggested that, if it is decided that the National Planning Commission will not continue beyond its current five year term, President Zuma might consider a structure like the US President’s Council of Economic Advisers, which gives the President independent high-level economic advice. It will be essential for the success of the NDP if President Zuma, when re-elected, appoints a Cabinet team which is fully committed to making a success of the plan. Not only government, labour and business need to find better ways to work together, but collective responsibility at cabinet level is also necessary if the NDP is to be coherently implemented in the period ahead.

ZAC: You say "good institutions can erode under the weight of corruption, racism, careerism and patronage." Is government not then seriously eroded?
PRP: The thrust of the NDP is precisely on how we can strengthen our institutions in ways that will create an economy that will be bigger, stronger and better by 2030. This covers both the public and private sectors but the emphasis in the NDP on better governance is unmistakeable. Corruption is recognized as one of major concerns, which requires to be jointly and effectively tackled by government and business. The challenge is to build on our strengths and frankly address those institutional and structural weaknesses which threaten to push SA into a low growth trap.

ZAC: The ANC is likely to win the election next year, with JZ at its helm. How will you judge his second term?
PRP: It is when Presidents are re-elected to their second term that they begin to think about their legacy. Some observers believe that President Zuma is not really interested in his legacy after 2019. It would be surprising and unusual if that turned out to be the case. After all, it was President Zuma who appointed the National Planning Commission in 2010 and asked them to come up with a 2030 vision for SA. Although the NDP now belongs to SA as a whole, he has a big vested interest in its success. It will be during President Zuma ‘s second term that he will need to provide the political leadership needed to push the implementation of the NDP. By the time he steps down in 2019, when SA should be about one-third of the way to 2030, he will want to be able to say: “Look, the economy is beginning to turn around and we have been able to make a dent in unemployment, poverty and inequality”. His eventual legacy at the end of two terms as President of SA will lie largely in the state of the economy and it is by that yardstick that he is likely to be judged.

ZA Confidential is e-mailed to subscribers. For details on subscriptions, please contact zaconfidential@gmail.com

Threat Grows of EU ban on ZA Citrus Exports

It is difficult to see how SA will be able to avoid a ban on its exports of citrus fruit to the European Union. The issue overshadowed the recent EU-SA Summit in Pretoria, after which President Jacob Zuma and his European guests tried to play down the threat – suggesting that a way had been found to take the heat out of the dispute, by handing assessment over to the scientists. The problem stems from a fungal growth – Citrus Black Spot (CBS) – which develops on some South African fruit, and which the Europeans are worried could spread to their continent from infected SA fruit. The Europeans agreed at the Summit not to act until five contaminated SA shipments had been detected, through inspection of consignments landing in Europe. At the weekend, EU Ambassador in Pretoria Roeland van de Geer confirmed that once five CBS-contaminated shipments of ZA citrus fruit were detected, the European Commission would propose “a temporary ban on South African citrus exports to the EU.” A European Commission spokesman has just confirmed to ZA Confidential that five contaminated consignments HAVE been detected. “The relevant European Commission services will now enter into a wide consultation process, including with the South African authorities, ahead of announcing steps to be taken,” he said. While the Ambassador stressed that “there is no automaticity between the 5 interception threshold and a possible ban” it is difficult to see how the EU can back away from this, or would wish to if it perceives a real threat to a sector in which several million people are employed. Certainly, there now does appear to be a looming threat of an EU ban on SA citrus. The Commission says SA exports 500 000 tons of citrus, most of it to the EU, sustaining over 100 000 direct and indirect jobs. It appears that the assurances from Jacob Zuma and others at the EU-SA Summit were premature. The crisis has arrived.

ZA Confidential is e-mailed to subscribers. For details on subscriptions, please contact zaconfidential@gmail.com

Worrying Slump in Business Confidence

Today saw the publication of not one, but two, business confidence indices. One from the business grouping SACCI, and the other from RMB/BER. Both suggested that there has been a slump in confidence, although the scale of the fall differed between them.

SACCI:
The SACCI Business Confidence Index (BCI) declined slightly from 90.7 in July to 90.5 in August 2013. Apart from the impact of labour protest activity, SACCI identified three further significant economic challenges confronting the South African business environment – slow economic growth, rising inflation and the exchange rate of the rand.

RMB/BER:

After fluctuating around the neutral 50 mark for about a year now, the RMB/BER Business Confidence Index (BCI) fell notably into net negative territory in the third quarter. The BCI declined by six index points to 42, which indicates that close to three fifths of the respondents rated prevailing business conditions as unsatisfactory.

Conclusion:

If business is worried, we should all be.

Tweet of the day:

Puns (@omgthatspunny): A noun and a verb were dating but they broke up because the noun was too possessive.

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Positive PMI Data

Some good news today for manufacturing. The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) increased by 4.3 points to 56.5 in August. The index is now at its highest level since August Moreover, the employment element of the index is also up, which suggests that more jobs are being created. ZA Confidential sought reaction from Mike Schussler, George Glynos and Mike Arnold from the Manufacturing Circle.

ZA Confidential is e-mailed to subscribers. For details on subscriptions, please contact zaconfidential@gmail.com