Monthly Archives: October 2013

Does the DRC Hydro Project Hold Water?

The Presidents of South Africa and of the DRC have this week given a push forward to one of the largest projects the African continent will ever see – the next stage of the Inga hydroelectric scheme on the Congo river. The attractions are numerous – in terms of clean electricity generation, pan-African cooperation and meeting the growing future demand for electricity. Of course, there are challenges as well, given the continuing instability in the DRC, a country at war with itself, and the challenges of securing the very long transmission lines from the project to customers elsewhere in Africa. What do our experts make of it?

Independent Economist Ian Cruickshanks::

SA has offered to take 50% of the power from the first stage of this project. Over decades this will be twice the size of the current biggest hydroelectric project in the world This could transform the continent and provide 50% of the continent’s power. Of course there are risks in finding the capital, and around the security of the transmission lines. If we get this extra power it could be very, very useful.

Duane Newman from Cova Advisory:

The Grand Inga has been on the cards for many years. It is a fantastic vision to have the largest hydro power project in the world, which can be used to drive economic growth on the continent. One of the biggest challenges to economic growth in Africa has been access to electricity. It is also positive that South Africa has signed a co-operation agreement with the DRC government which I do expect to create large business opportunities for SA construction and engineering companies. For the SA economy to benefit from this green power we need to ensure that we start working on a strong electricity distribution network from the hydro power station to SA.

Trade analyst and strategist John Mare:

The news that SA and DRC have signed an agreement to cooperate in making the Grand Inga a reality must be one of the most exciting bits of news from Africa in recent months. It will be a major accomplishment and one of the “greenest” hydro-power projects in the world to date as it uses the head of water in a natural gorge to give the power generation. SA engineering/mining skills are crucially needed to tap this head of water at the base of the gorge and in parallel to build tunnels to bring the waters of the Congo River into what can become a vast network of irrigation projects in the vicinity of Inga, which is close to the Atlantic Ocean where Angola (Cabinda)/Republic of Congo and DRC converge, as well as into northern Angola. It will become the platform for a major new hub of development on the Atlantic coast of Africa facing Brazil and the Gulf of Mexico as well as Atlantic shipping routes. The fact that it is close to such major metropolitan centres as Kinshasa, Brazzaville and even Luanda helps add to its impact on a variety of sectors. This bodes well for growing stability in Central Africa along with improved regional integration in the Central African region, which is vital for African stability as a whole. The potential for SA to play a major role in almost all of these sectors that will be supported by Inga’s energy supplies and the knock-on effect of both Inga and its logistical development is enormous. Apart from engineering, mining and energy matters there would be a variety of logistics, urban development and especially agriculture in the region along with beneficiation of mineral and agri-resources. Improved air-linkages with a new air hub for Africa and tourism are other probable spin-offs. The enormous funds needed have been a major problem, along with diplomatically managing all stakeholders in such a mammoth scale project, but possibly the time has come for these to be overcome

Comment:

It would be encouraging to see some practical cooperation within Africa on such a grand scale, and while the risks are there, the rewards make this project one to watch.

Tweets of the Day:

Funny Tweets™ (@Lmao (https://twitter.com/Lmao) ): Nothing is more annoying than being in a bad mood for no apparent reason and being asked "what’s wrong?" over and over again.

Puns (@omgthatspunny (https://twitter.com/omgthatspunny) ): A boiled egg in the morning is hard to beat.

Alan Garner (@AlanHungover (https://twitter.com/AlanHungover) ): My friend Phillip had his lip removed today. We call him Phil now.

Puns (@omgthatspunny (https://twitter.com/omgthatspunny) ): I’m not a big fan of archery. It has too many drawbacks.

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New Initiative to Help Victims of Rape and Sexual Assault

ZA Confidential attended the recent Accenture Innovation Awards, and met some of the finalists. One who struck us as a thoroughly impressive individual was Mara Glennie, who is using the cell phone system to help the victims of rape and sexual abuse to seek help, through an initiative called Tears. ZA Confidential chatted to her….

ZAC: What inspired you to set up Tears?
MG: My motivation comes from a deeply personal space. I was a victim of violence and tried to report it at the local Police Station. I was told to come back on a Monday between 8.00 and 4.00. It was 6.00pm, on a Friday! I felt helpless and desperate and did not know where to turn. The memory of that feeling has never left me. So some years later I decided to take action and make assistance easy – for every South African to get help at his or her fingertips – and we are proud to say we launched the service on Women’s Day this year.

ZAC: If someone has been threatened, how does it work?
MG: The first phase of our assistance is reactive – what to do if the assault or rape has already occurred. Where to get help is not as easy as people think, as the places are either non-existent in some areas, or difficult to locate in other places. Tears is a bridge between the victim of rape & sexual abuse and a service provider. At Tears we have an existing database that has been carefully researched and we are still adding to it on a daily basis, thus making it easier for the victim/survivor to find help. Included in the next phase of the mobile assistance system will be an option for an emergency. In case of a life-threatening situation, you would dial 2 for Emergency. The message will be sent to a call centre where agents will contact the victim back, assess the situation and respond accordingly by phoning the authorities – ambulance, police, or even getting hold of a family member.

ZAC: What has the response been like so far?
MG: We had over 3000 “hits” in the first 9 weeks, and had not yet publicized the number nationally. We believe that once the service has received national coverage, this will increase vastly. A rape occurs every 25 seconds in our country. Victims of sexual assault require comprehensible, gender–sensitive health service in order to cope with the physical and mental health consequences of the experience and aid their recovery from an extremely distressing and traumatic event.

ZAC: For many poorer South Africans, having airtime on their cells is an issue. Does a lack of airtime prevent them from raising the alarm?
MG: We have developed our service across all platforms. At present you have to have 20c on your phone to use the service. We have made relevant applications to change and have offered to pay the fee. However, currently, that is not able to be implemented. We are aiming to provide this service free for the end user. The information can be accessed on our web site www.tears.co.za

ZAC: Have the authorities given you any support, or given you any encouragement?
MG: No support has been received from the government or parastatals. We sincerely hope that once the relevance and need for a national data base of rape and abuse survivors is acknowledged, the Tears initiative will receive the funding we so badly need. It is a first of its kind in Africa.

ZAC: Have you made much of a difference yet?
MG: The potential of reaching out to victims in South Africa is untapped and although we have helped individuals we have not yet make a real difference. It will grow with awareness that the number needs to be on every South African’s phone. The service is still in its infancy stage.

ZAC: What is needed to really grow Tears?
MG: Tears’ reactive service, the Help Line, is the bridge to give victims the access to the much needed help and support they desperately need to help the healing process begin. Tears’ proactive service is an educational game – LifeBoard: This fun educational game can be adapted to any age, gender or social group. The game educates on all levels about inappropriate behaviour, rape, sexual abuse, communication, making a difficult subject easy to talk about and learn through laughter. In order to make both of the above services available to every member of the rainbow nation we need funding. There are no companies in South Africa that we have been able to identify that have a CSI profile to assist rape. Generally, funding is scarce. Not only are companies cutting back on funding but those funds that are available are not allocated to combatting ape and abuse. To date most of the funding is self-funded – hence this stands in the way of Tears developing its true potential.

ZAC: You were one of the finalists for the recent innovation awards. What did that recognition mean to you?
MG: I believe it went some way to show to the sceptics (and there were many) that the service is really a unique innovation and can (and does) work. It does and it was a wonderful experience to be amongst the amazing innovations, and I hope that it will now open doors for the future.

ZAC: What comes next?
MG: We are planning an emergency Service Call centre – which is under development. We will then extend the service to provide more information, and will launch a cell phone application.

Tweets of the Day:
Hantus Mostert (@CDS_VINTEC): The world loves South African wine. It’s liquid ☀ and some say liquid poetry.

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Some Encouragement from Unemployment Data

New data from Statistics SA show the unemployment rate has improved – falling to 24.7 % in the third quarter from 25.6 % in the second quarter. The labour force increased by 194 000 to 18.6 million, while the number of unemployed people fell by 114 000 to 4.6 million. The number of discouraged work seekers – those who are willing and able to work but are not actively searching for employment – fell by 125 000 to 2.2 million during the quarter. What do our experts make of it?

Mike Schussler from economists.co.za:

We have never ever had this big a growth in employment on a quarterly basis – with over 300 000 jobs, and the yearly growth rate is the highest in over eight years! This certainly does not gel in my thinking with the weaker economy – but we do see high consumer spending, which does support at least some job growth, as the money must come from somewhere.

Dawie Roodt from the Efficient Group:

Better than expected! A few comments: the fall in agricultural jobs is probably directly related to the sharp increase in the minimum wage earlier this year. Compared to a year ago, the number of discouraged work-seekers increased, a real concern – however, on a quarterly basis there was some improvement. And the increase in employment in the service and trade sectors is good – sign of a modern economy. However, we need more jobs for the unskilled, and clearly the economy is not creating enough of those.

Loane Sharp from Adcorp:

During the quarter, 308 000 more people were employed than in the previous quarter, with the formal sector contributing most of these jobs. A further 114 000 people left unemployment, with large numbers of people expressing newfound hope about their prospects of finding work. Most of the new jobs were created in the services sectors, notably retail, finance and government. Most of the new jobs were created in white-collar occupations, notably clerical, administrative and professional staff. Around 54% of new jobs were temporary in nature, reflecting employers’ continuing uncertainty around the durability of the current expansion. According to the report the last quarterly improvement is not a once-off event: employment rose in seven of the last nine quarters, even though economic growth slowed from 4.0% to 1.7% per annum over the same period. Nonetheless, South Africa’s unemployment challenge persists: since 2008 the number of unemployed has increased from 3.9 million to 4.6 million, and at present 31.4% of youth aged between 15 and 24 is in neither education nor employment.

Neren Rau from SACCI:

SACCI welcomes the slight drop in both the official and expanded definition of unemployment. SACCI is hopeful that this trend can be sustained in order to build a more inclusive economy. Policy interventions like the Employment Tax Incentive should help to strengthen this trend provided its scope of application is widened. SACCI remains concerned over ever growing public sector employment. Government employment increased by 120 000 on an annual basis in the third quarter of 2013, the biggest growth item for this period that further entrenches government as the single biggest employer at 3.15 million, followed by retail trade with 3 million. The strong quarterly growth in Construction (100 000) and Finance (92 000) also showed that the private sector has significant appetite for employment creation.

Nedbank Economic Unit:

The rise in formal sector jobs is encouraging. However, this does not reflect a sustained increase in job levels. Subdued economic growth on the back of still weak, although improving, global conditions and lacklustre domestic output growth point towards job creation remaining generally slow in the next few quarters. These numbers, together with the credit demand figures released earlier today, confirm that demand-driven inflation remains subdued. We therefore expect the Reserve Bank to keep interest rates unchanged well into 2014 as it strikes a balance between high cost-push inflation and modest domestic growth.

Tim Harris of the DA:

The Quarterly Labour Force Survey released today indicates that unemployment has become entrenched at more than 35% over the past year. The new jobs created in the third quarter are almost completely neutralised by the increase in the size of the labour force and an increase of 70 000 jobseekers who have given up looking over the period. The report further shows that 3.3 million young South Africans are not in employment, education or training. In total 6.8 million South Africans are unemployed or have given up looking. In 2009, 5.8 million people were unemployed or already gave up looking for work. Today, one million more people are unemployed than at the start of President Zuma’s term in office.

Comment: It is always encouraging to see a fall in unemployment. However, the army of the jobless still has far too many members, and we are not creating jobs fast enough. Wait, too, for the impact of all the above-inflation wage rises which have been awarded recently, leading to more mechanisation and fewer people in our factories and mines.

Tweets of the Day:

Sarcasm (@WorIdComedy): You’re not fat, you’re just.. easier to see.

Azanian (@ntk_999): Cruel Fact. RT~»"@UberFacts: You’re more likely to die on your way to buy a lottery ticket than you are to actually win the lottery."

Puns (@omgthatspunny): I saw a beaver movie last night, it was the best dam movie I’ve ever seen.

Puns (@omgthatspunny): For a while, Houdini used a lot of trap doors in his act, but he was just going through a stage.

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Die Vine Intervention 25 Oct. Credo Quattuor Chenin Blanc 2010

Michael Olivier introduces a classy Cape Chenin to John Fraser, Malcolm MacDonald and Chris Gilmour.


Is Gordhan About to U-Turn on Booze Ban?

In yesterday’s ZA Confidential we expressed concern that Finance Minister Pravin Gordhan had announced in his mini-budget that there would be curbs on the government purchasing booze for official functions. We are grateful to 702 Eyewitness News for reporting from CT that the Minister may be having second thoughts – a story which the mainstream media appears to have ignored. According to 702, Cope MP Nick Koornhof raised the issue in Parliament yesterday, saying it was unthinkable that South African wines would no longer be served at state functions. Gordhan reportedly agreed to reconsider the scope of the alcohol ban. The Cape wine industry is a source of national pride, and we want every possible support from government for our producers. This is an issue we will follow with keen interest, and hopefully more media outlets will follow the lead of 702 in reporting the matter.

Tweets of the Day:
Puns (@omgthatspunny): Two hats were hanging on a hat rack in the hallway. One hat says to the other, ‘You stay here, I’ll go on a head.’

Life Pro Tips (@LifeProAdvices): Remember, the difference between a boss and a leader… A boss says "Go" A leader says "Let’s go"

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Who Will the Government Ban on Buying Booze Really Hurt?

This week’s mini-budget was disturbing. Not only was projected growth scaled down, but there was little indication that government has the slightest clue on how to get us out of the mass-unemployment trap into which the country has fallen. Attention inevitably fell on some of the measures to clamp down on the worst excesses of our kleptocratic politicians and officials, but there was one measure which worries me. Those who encounter me at company briefings and other events will know that I am partial to a glass of good wine with good food. And even when the standard of corporate catering is really pathetic, as is often the case, the wine can be a small compensation – when offered. Now, there are many government functions where I am sure the guests neither deserve good booze or much good grub either. However, there are events where our taxes are used to help promote the most deserving industry in this country – the Cape Wine industry. If Finance Minister Pravin Gordhan is really banning booze at State Functions and diplomatic events, I would be worried, not that ZA Confidential is often on the guest list for these. I suspect what Gordhan is doing is shifting the bar bills from the State to the private sector – seeking sponsorship for the alcohol. If so, the impact may be dampened and there might be good reason to raise our glasses to the Minister. But what do our experts make of all this?

Frans Cronje from the SA Institute of Race Relations:
Nice sentiment but let’s not get carried away. This is not why we have a deficit crisis and nor will it solve the crisis. The real issue is growth, investment and the policies that undermine these outcomes. If the government were as bold on these harmful policies – stricter employment equity and BEE, cadre deployment, more taxation, failed schools, and increased labour regulation – as it promises to be on its liquor bill we would indeed have something to celebrate. In some respects it suggests the limited scope of influence granted to our finance minister by the president and the cabinet that he is allowed to determine the lunch bill but not to change much in terms of policies that actually matter. The minister wants to tell the country that this is austerity. If his government really wanted to save resources for South Africa it would cut the mounting pile of costs being foisted on investors and consumers. The real waste is not ministers having a tipple. It is paying the administration fees of e-Tolls. It is new carbon taxes. It is raising the cost of business via new BEE goalposts. But he is impotent on these issues because his cabinet is not yet ready to make the hard choices to reform SA’s economy. You can add to my list the costs of bailing out SAA and the SABC and a host of other state-owned enterprises. In fact he has done his cabinet colleagues a disservice – because with what is in store for our economy they will need more than a few stiff drinks.

Duane Newman from Cova Advisory:
As leaders in government they need to lead by example and practice what they preach. For many years we have not seen that, as government leaders spent with little regard to the example they set. Now that government have taken a harder line on alcohol, it is pleasing to see that they are leading by example ..t is also pleasing that limits will be set on vehicles purchased and credit cards will be cut up. I know I cut up my own corporate credit card when I was in business as it is just too easy to spend on it. If you have to spend on your personal card and claim it back, there will be a lot more rigour in the process. While there are limits on (the cost of official) cars, I would like to see government leaders being forced to buy locally-made cars. Buy local is also another government lead initiative.

Food and Wine guru Michael Olivier:
I am thrilled with this new idea! I like the fact that first class air travel and luxury cars are being put an end to as well. Not quite sure what they mean by public funds though? Doubtless they will have catering and they will have alcohol – so where will that money come from? Government exists on public funds.

Branding guru and wine lover Jeremy Sampson:
How sad that Cabinet Ministers, Ministers etc, all public servants, cannot be trusted with the public’s (our) money. I applaud Mr Gordhan, wonder how it will be implemented, and look forward to people being held publicly accountable. The suggestion that this will save millions if not billions is mind boggling and the fact that people will have gotton away with it is criminal. As to alcohol, most leaders of countries have a State Wine Cellar to use when visiting dignitaries are in town. That¹s important. As to the rest of it, like all of us, pay your own way. And buy South African.

Hotel Executive Graham Wood:
Any austerity measures proposed that seek to minimize wasteful expenditure should be welcomed! Compliance to directives will always be the challenge!

Chris Gilmour from Absa Investments:
I think Pravin Gordhan’s comments on alcohol should not be seen in isolation; rather they should be seen in the overall context of a new cost-conscious regime that is about to come into operation at government. This includes the scrapping of government credit cards, curbs on premium air travel and a limit that can be spent on cars etc. It is sending out a clear and unequivocal message to cabinet, regional and municipal politicians as well as the general public that the intention to spend taxpayers’ money wisely is sincere. Gordhan has always led from the front – he walks the talk and has an appeal that transcends the political divide. This message will further endear him (and government) to a broad range of ordinary citizens.

Comment:
Our experts have come up with a range of useful views. While I applaud the crusade against waste, I just hope that the Cape wine industry is not a big looser in all of this. Get rid of the gravy, but please don’t throw out the wine as well.

Tweets of the Day:

Puns (@omgthatspunny): When the smog lifts in Los Angeles, U C L A.
Chris Hart (@chrishartZA): Employed people have more dignity, better health, are able to keep their children in education for longer.

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ZA in Global Top 3 for Cyber-Crime

The cold-blooded execution last week of forensic auditor Lawrence Moepi in the car park of his office complex was a graphic illustration of the way in which crime and criminals do not just operate in a shady underworld, but can be found in more mainstream walks of life as well. Werksmans Attorneys this morning arranged a briefing on white collar crime with director Dave Loxton, who suggested that South Africa’s general levels of lawlessness have put us in the global top three for cyber-crime – after the Russians and Chinese. Having said that, he noted that corruption is not unique to ZA, and is a worldwide problem. In the last twelve months one in four has paid a bribe – in ZA it’s one in 2. He noted that in the last two years his white collar crime practice has shifted to focus on cyber-crime. Within the next 3 years, the fruits of cyber crime will outweigh the fruits of all other white collar crime. One large ZA corporation, which he was unwilling to name, has had its

server hacked for 4 years, and the cyber-spies intercepted all board packs and correspondence with CEO, while material was sold from the warehouse. It was a large international syndicate, with the local ZA player being paid in drugs. A few statistics: globally, 600 000 Facebook accounts are compromised per day, with 1.5 m victims per day of cyber crime. ZA loses about R1bn per year to cyber crime, and the global cost is $110 bn. Why is SA in the top 3? Loxton says it is because we are a very lawless society and international syndicates know that law enforcement is paper thin, due to a lack of resources. Many people fail to take basic security measures for their cell phones and tablets- they are more interested in the device’s features than its security. He concluded that cyber-crime is a national crisis, and in this area we have a serious skills crisis – with little police expertise to crack cyber-crime. The FBI is brilliant – the SA police service has very few

brilliant people. In ZA we need to recognise there is this national crisis and throw resources at the scourge of cyber-crime.

Comment: Things are bad, but at least we are not Malawi.

Tweets of the Day:

Politics & Law (@PoliticsL (https://twitter.com/PoliticsL) ): How many lawyers does it take to screw in a light bulb? How many can you afford?

Puns (@omgthatspunny (https://twitter.com/omgthatspunny) ): I used to hate maths but then I realised decimals have a point.

BabyBlade (@ZitaHarber (https://twitter.com/ZitaHarber) ): Ballerinas are always on their toes. Why don’t they just get taller ballerinas?

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Die Vine Intervention: Simonsig Labyrinth Cabernet Sauvignon 2008

Michael Olivier introduces our tasting panel to another Cape stunner, the 2008 Simonsig Labyrinth Cabernet Sauvignon. John Fraser is joined in the Die Vie Intervention studio by Ian Cruickshanks and Lavan Gopaul.


Die Vine Intervention: Simonsig Labyrinth Cabernet Sauvignon 2008

Michael Olivier introduces our tasting panel to another Cape stunner, the 2008 Simonsig Labyrinth Cabernet Sauvignon. John Fraser is joined in the Die Vie Intervention studio by Ian Cruickshanks and Lavan Gopaul.


KPMG Takes a Look at the Construction Sector

Financial services group KPMG has just published its annual survey on the global construction industry. ZA Confidential caught up with KPMG’s Africa Construction Leader Gavin Maile to find out how the sector is performing….

ZAC: How would you summarise the current state of the construction sector in ZA, and how does it compare to the global picture?
GM: It looks like we are past the low point and the majority expect improvements in both order books and margins. SA margins were lower than those globally for the past year, but are in line going forward.

ZAC: What about the outlook, locally and globally?
GM: A real turnaround is expected in 2 – 5 years – both local & global – except in the Americas, where the turnaround is strongly in progress

Q: Are there particular customer sectors which offer favourable prospects for our construction firms?
GM: Power & Energy are expected to make most impact

ZAC: The ZA government’s infrastructure programme is obviously going to be of great importance, given its scale. Do you see more spending coming through the pipeline, because a persistent criticism has been the State’s failure to implement its spending plans?
GM: There does appear to be more traction and progress happening.

ZAC: The admitted collusion among some local construction firms, and the high fines which have been levied, have tainted the image of the sector. Do you think the worst is now over for the companies involved, or will the calls continue for civil suits and heads to roll among executives?
GM: Most CEO’s have already rotated – but I expect there will be further distractions to business as normal.

ZAC: When he attended your launch, the Minister of Public Enterprises Malusi Gigaba called for the industry itself to take a more positive stance and work with government on issues like skills development and empowerment. Is there much of an appetite for this.
GM: I believe so, as industry needs these skills as well to sustain themselves

ZAC: We hear a lot about the opportunities in Africa, but some local firms have had poor experiences elsewhere in the Continent. What is the outlook in the short and medium term for activities by ZA firms in the rest of Africa?
GM: Very positive – especially where they follow their local clients into Africa – specifically in mining.

ZAC: Finally, the recent strike in the sector was settled. Do you expect a period of relative calm in terms of labour relations in the construction industry?
GM: Sorry – no idea.

Tweets of the Day:
Funny Tweets (@iQuoteComedy): i’m only a morning person on december 25th

Puns (@omgthatspunny): I was struggling to figure out how lightning works then it struck me.

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