Global South African News Wrap 19 October 2012

New ideas and new leaders can get us out of this mess ANC must reclaim media freedom Sisulu punted SA is sitting on a powder keg, warns Vavi Rating downgrades will hit Eskoms cost of capital Life expectancy rises as HIV plans kick in Zuma leads bid for social pact to save SAs frayed image amid mine strikes SAs leaders ignoring crises, says Loubser SA has 'lost its compass' JZ wants CEO pay cuts Police top brass still under fire Gauntlett: I'm no Mother Teresa African rhino poaching hits record on cancer cure claim Remove Zuma from Nkandla, says Juju Expert warns of turf war spreading in province Cosatu endorses Zuma Treasury to keep grip on Limpopos finances Hlophes shadow hangs over Gauntlet interview Public Protector Madonselas office is our only hope Jujus goons attacked Zimjournos NUM blames Malema for wildcat strikes The Thick End of the Wedge Time to pull in one direction Unlikely ANC will try to unseat Madonsela Wage restraint agreed for SAs top earners Cosatu to discuss ANC leadership Transnet R302bn expansion stams on Public protector claims knives out for her Markets to take knock after S&P downgrade SA has highest social inequality in BRICS: report Tourists flock to SA despite downturn

18 October 2012 Business Day Page 11 Songezo Zibi New ideas and new leaders can get us out of this mess UPON completing a media interview, eThekwini councillor Mzonjani Zulu allegedly calmly fired two fatal shots at Siya Dlamini outside the Ntuzuma Magistrates Court in KwaZulu-Natal. He then went into the court building, where police arrested him. The killing follows a spate of violence between the Inkatha Freedom Party and the National Freedom Party in which more people have been killed. The violence is unlikely to stop and is not limited to the battle between the two parties African National Congress (ANC) members in the province seem to be following the trend. Industrial relations have not been immune to violence either. We have had a massacre of 34 people by the police, which was preceded by the violent murder of 10 people, including two policemen. More have been murdered since the strikes in the mining sector began. Truck drivers also engaged in their own violence, resulting in the murder of a man in the Western Cape. The country is bracing itself for a new wave of industrial action which, if past experience means anything, is likely to exceed the rules of normal picketing. The South African Municipal Workers Union is finalising consultations with its members before embarking on a nationwide strike, possibly bringing local government services to a halt. Of course, we cannot forget that almost the entire board of the national airline, South African Airways (SAA) recently resigned, followed by the CEO and some senior executives. President Jacob Zumas choice of a national director of public prosecutions was deemed irrational and set aside, while the Judicial Service Commissions Western Cape interview process has also been set aside. This is not an exhaustive list of the warning lights that characterise our national life, but it certainly gives an indication. Perhaps what should concern us more is that we have become so used to it. We no longer see the grave seriousness of such a picture because it has taken on a strange semblance of normality. At this time of the year, many boards and executive committees lock themselves away for strategy sessions. It would be interesting to find out to what extent the real world that exists outside their spreadsheets and presentations plays a role in their planning. Perhaps we would get an idea of whether they empirically apply themselves to understanding the risk presented by our national politics and all that relates to it. More likely is that, like the rest of society, they are pinning their hopes on the ability of the two main political parties, the Democratic Alliance and the ANC to miraculously produce a leader who will rescue the rest of us. They will not do a deep assessment

of the chances that these parties are able to deliver on this hope, or whether, in the absence of supporting evidence, the hope is a delusion. Since former president Thabo Mbeki swatted Anglo Americans Tony Trahar for raising the issue of political risk, very few business people have dared mention the term. It is considered a form of treason, yet it must now be one of the most important strategic considerations for companies with significant investments in the country or those planning to make them. What does the long term look like if we continue with "political business as usual"? Are there any emerging trends that demonstrate that a new direction is likely in the next five to 10 years? Do companies have an improving idea of how the future might affect their investments and earnings? Will they know how to react or will they always be surprised? Probably even more important is whether the business sector believes it has any role beyond the obvious, where it can help to shape a better future for South Africa and therefore improve its prospects. Unlike Europe and North America, South Africa is bereft of a deep culture of national strategic and intellectual reflection. Existing think tanks generally preoccupy themselves with the minutiae of social and economic conditions or party palace politics. Thus business remains ignorant. So far, only the Mapungubwe Institute for Strategic Reflection is making a concerted effort to start asking and answering deeper questions of South Africas evolution. Outside of its efforts, however, there is no visible crop of new, young thinkers who try to reimagine South Africas future with the seriousness that this task deserves. Thus, we have no meaningful effort to try to understand why an elected official casually shoots another man in cold blood right in front of police officers. We speak only anecdotally about the reasons for state-owned enterprises such as the South African Broadcasting Corporation and SAA being in such disarray, while those at the helm insist everything is "normal". We also do not speak of our apparent inability to make critical appointments properly and fail almost each time the courts review such decisions. Consistently passing up the opportunity to reflect honestly and openly on these and more questions that matter deeply to the future of this country, we are highly unlikely to find any meaningful solutions to these problems. We will also not assess empirically the effect of this relentless degradation of the national fibre on our national economic and social prospects. There appears to be a conspiracy of ignorance and silence. Perhaps it is harsh to then expect business to indulge in such reflection, when evidence of decline is seen as abnormal. It is therefore likely that businesses will continue planning and investing in hope rather than informed analysis. Could it be possible that this analysis and reflection are being done and the prospects look brighter than current trends suggest? Perhaps business is able to look beyond the current noise and point to emerging fundamentals that show that the country is on the up, despite the shocking scenes that confront us daily. Maybe they dont want to share this for reasons that remain unknown, since authorities would be likely to welcome it.

On the surface, it appears that South Africas fortunes are being decimated by neotraditionalist thinking, in which old formulas of individual and institutional leadership are cast in stone. There is no emerging corps of young South Africans in business, politics and civil society who demonstrate a new convergence of ideas about how to recast South Africa at an individual and institutional level to meet the challenges of the 21st century. It is only through such fresh, emerging consensus that a more cohesive society, a stable politics and a credible economic formula will emerge. This consensus must radically reform our national politics, close the gap between ordinary people and leadership and pursue an agenda of institutional reform premised on a significant shift in mind-set across all sectors of society. Such a shift cannot occur without ideas. Maybe only then will it be abnormal for a councillor to shoot another person in broad daylight because of apparent political differences. Perhaps only when a consensus emerges by force of a miracle will business also recognise what has been missing all along but dont hold your breath.

18 October 2012 Business Day Page 11 Z Pallo Jordan ANC must reclaim media freedom Sisulu punted REFLECTING on the life of Zwelakhe Sisulu once again underscored the integral relationship between the liberation struggle and media freedom. It is appropriate that we remind ourselves that among those who gathered at Mangaung in 1912 were at least three founder editors, who consistently fought the good fight for a free press. Receiving the sad news of the passing of Sisulu made me recall my encounters with the man. I knew him by the reputation he had earned as a courageous journalist and liberation activist. Besides his pedigree as one of the sons of a distinguished family in the liberation struggle, Sisulu had crafted his own identity over many years of persecution at the hands of the apartheid regime. Our eyes immediately fell on Sisulu when filling the office of the first post-apartheid CEO of the SABC. Tension between those tasked with governing and the media, as purveyors of information and opinion, is inevitable, even in a democracy. Accepting this tension does not betray a temptation to censor. As a seasoned journalist, Sisulu brought to the job an integrity honed in the struggles he had waged in the local media and against a repressive regime. He left the SABC with his reputation untarnished. One day, the story of the struggle on two fronts that black journalists were compelled to wage will be told. Newspaper proprietors insisted on a staple of crime, gossip, celebrity and sport, pandering to the worst vices of tabloid journalism to realise profits. That is where most black journalists cut their teeth in the 1950s and 1960s. The 1976 Soweto uprising compelled editors to treat news about the urban black community more seriously. Sisulu was among the black journalists who drove that transformation through interventions in the profession.

The apartheid regime exacted a heavy price from those who opposed it in earnest. Beginning with the banning of the Guardian, a leftwing weekly edited by communists Brian Bunting and Ruth First in 1952, it also banned the Guardians successors, Peoples World; Advance, New Age and Spark. Banning orders served on the papers editors in 1962 prevented them from working as journalists. The Torch, aligned to the Unity Movement, fell before their axe too, in 1963. A multifaceted censorship regime, which Lawrence Gandar and Benjamin Pogrund were prosecuted for violating by publishing the prison experiences of Harold Strachan, was also in force. Strachan was sent back to jail for the "crime" of discussing his experiences with the journalists. It was in that authoritarian environment that a young Sisulu learned how to navigate the repressive laws of the time. Some editors had the courage to employ black journalists. When trouble came, they stood by them. But the print medias record was inconsistent. Anthony Holiday lost his job the day after he was detained by the security police. No Afrikaans editor ever criticised these overt repressive measures. Some even supported the state against the media. The mere act of reporting accurately on the lives and experiences of black people constituted a political action during those decades of white minority rule. The indefatigable Henry Nxumalo, "Mr Drum" of the early 1950s, deliberately engineered a weeks imprisonment by violating some degrading curfew law and brought out a harrowing report on prison conditions. But rather than improve its prisons, the apartheid regime passed the Prisons Act, making it illegal to report on any South African prison the law Gandar and Pogrund fell foul of. Yet imprisonment for breaking one or other of the hundreds of laws and ordinances that regulated the lives of black people was the experience of thousands in urban areas. Sisulu and the generation of black journalists who helped to found the Media Workers Association of South Africa faced the more daunting challenge of telling these stories in an environment of intense repression by a regime facing the active hostility of the majority. Though never charged, tried and convicted of breaking a single one of their repressive laws, Sisulu served repeated bouts of detention without trial. Undeterred by these persecutions, he returned to the trenches to take up the fight after each. It was these qualities that recommended him to the Southern African Catholic Bishops Conference when they sought an editor for their newspaper, The New Nation. Under Sisulus stewardship, the paper became the pioneer of the "alternative press", offering accurate information and servicing an ever-widening network of democratic activists. Working together with others, they mentored a number of aspiring black journalists, some of whom now hold senior positions in our print media. They had the good fortune of training in environments far more friendly and supportive than previous generations. But making the countrys media demographically more representative proved as great a challenge as freeing it from repressive laws. Sisulu was a journalist in the tradition of the founders of the African National Congress (ANC). It is by reclaiming its historic standards, such as media freedom, that the ANC will renew itself and restore its credibility. Lala ngoxolo Xhamela!

17 October 2012 Business Day Page 3 Natasha Marrian SA is sitting on a powder keg, warns Vavi THE ethos of service to the people over personal advancement is quickly being forgotten by the African National Congress-led movement, Congress of South African Trade Unions (Cosatu) general secretary Zwelinzima Vavi said on Wednesday. Delivering a blunt critique of South African society and the deep structural flaws that maintain the economic inequalities in the country, Mr Vavi warned that the "hammer blow of revolution is no longer a distant reality". Mr Vavi was delivering Unisas Annual Abdullah Omar Safety and Human Rights lecture at Constitutional Hill in Braamfontein, Johannesburg. The ANC is preparing for its national elective conference in December, where Cosatu expects radical policies to be adopted to change the structure of the economy and to renew the party itself and rid it of the myriad internal problems it faces. A meeting of Cosatus top brass on Tuesday resolved that the ANC should "reassert the values of sacrifice, selflessness, service to the people, democratic participation, harnessing of peoples power". The "squalid morality" of capitalism with its "me-first" outlook had seeped into the "revolutionary movement", Mr Vavi said. "(It is) dragging in its wake huge problems of factionalism and even assassination of opponents and whistle-blowers," he said. "We are rapidly forgetting the traditions of our movement, which valued service to the people above any thought of personal advancement," he added. While the economy remained largely in white hands, a "black elite" had shaken off the chains of apartheid and created "an oasis of opulence" for themselves. This group had access to world-class private healthcare, and their children played on "the same rugby fields as descendants of the Oppenheimers and Ackermans of this world". "Their lavish golf courses, which guzzle litres and litres of water through their sprinkler systems, keep them entertained and give them a safe haven to strike their dirty deals. Their high walls and electric fences insulate them from the wrath of the poor," Mr Vavi said. The reign of the rich was not forever, he warned. Mr Vavi also bemoaned a society in which working-class mothers died giving birth, where newborns died because hospital wards were not disinfected, and where breast-cancer patients queued for access to radiation treatment.

"I do not possess the powers to look into a crystal ball and tell you about what the future hold. But I know from my experience of struggle and my own reading of history that every force always produces its opposite," he said. Poor people could only tolerate so much. "We are sitting on a powder keg, which is slowly approaching the point of explosion." As he spoke, the labour unrest in South Africa mines continued to rage around the country with some of the lowest-paid workers demanding increases outside formal collective bargaining structures, through wildcat strikes, some of which have turned violent. Mr Vavi hit out at those claiming "neutrality" those who sat on the fence amid the injustice in society and said they were complicit in it due to their inaction. "All middle-class South Africans must remember Archbishop (Desmond) Tutus warning that if you are neutral in situations of injustice, you have chosen the side of the oppressor," he said. The inequalities in South Africa were compounded by corruption, crime, incompetence and the "squandering of public resources". "A greedy criminal elite is systematically robbing the poor and sabotaging efforts to improve the lives of the people," Mr Vavi said. This year has also witnessed the highest number of service delivery protests since 2004. Mr Vavi said South Africa was viewed as the world "capital of protest action", and more worrying was the violent nature of these protests. Increased levels of desperation over poverty and inequalities drove workers and the poor "straight into the arms of violence". "If we moving in this direction, then God must help us all," Mr Vavi said. The fight against injustice in South Africa today could only be won though mass mobilisation and a "united front", he added. "We can no longer continue to be spectators in a game that will ultimately determine our future."

18 October 2012 Business Day Page 2 Siseko Njobeni Rating downgrades will hit Eskoms cost of capital POWER utility Eskom on Wednesday said it was concerned with the recent downgrades by ratings agencies Moodys and Standard & Poors. Credit rating agency Standard & Poors (S&P) on Wednesday announced that it had downgraded Eskom's credit rating by one notch, as a consequence of its recent decision to downgrade the South African sovereign rating.

S&P retained its negative outlook on Eskom. Higher ratings are important for Eskom because the utility relies on debt to fund its capital expansion programme. The company still needs to borrow billions of rands. In its latest annual report, Eskom said it closely monitored credit metrics. For its capital projects, it had to raise money. "New capital projects will require pre-identified funding sources before they are authorised to proceed," the power utility said. Eskom has in the past singled out reliance on the governments credit ratings as one of the risk factors affecting its ability to raise finance. Its major capital projects include the Medupi and Kusile coal-fired power stations as well as the Ingula pumped storage scheme. Further, Eskom is likely to play a central role in future power generation projects as envisaged in the states integrated resource plan. Eskom on Wednesday said that although its credit rating remained investment grade, it was concerned about the downgrades received from S&P and Moodys. Moeketsi Thobela, of Energy Solutions Africa, said the downgrades caused concern because they put upward pressure on Eskoms borrowing costs and, in turn, future electricity tariffs. "The effect will be to bring into sharp focus regulatory decisions regarding how any further funding of the capital expansion programme will be split between debt and equity. "Noting that, according to Eskoms 2012 annual report, cash from operations increased 38% between 2011 and 2012, any further increase of this order of magnitude is likely to be significantly challenged in the upcoming (multiyear price determination) process. (This will) potentially (result ) in limits on the amount of reserves that the utility can accumulate in support of the expansion programme." Mr Thobela said the amount of debt that Eskom could carry would also be limited, depending on the extent to which interest and bond yields increase as a result of the downgrades. Last week S&P lowered the long-term foreign and local currency ratings on South Africa to BBB and A-respectively. Mr Thobela said the principle applied in the Eskom downgrade was that it could not have a corporate rating higher that the sovereign one. "However, it would seem that the upcoming (price determination) process will be watched closely and so will any hint whether or not the events that have recently taken place in the platinum and gold sectors spread to coal mining."

18 October 2012 Business Day Page 1 Tamar Kahn

Life expectancy rises as HIV plans kick in THE government has made much better progress in improving life expectancy and reducing deaths among young children than it had hoped, largely due to the rapid expansion of its HIV-treatment programmes, a new report from the Medical Research Council shows. The findings are good news for President Jacob Zumas administration, which promised in 2010 to work for "a long and healthy life for all South Africans". Detailed targets for improving the health of the nation are spelt out in a five-year service delivery agreement signed by Health Minister Aaron Motsoaledi and the president. They include increasing life expectancy at birth from 56.5 in 2009 to 58.5 by 2014, and reducing the mortality rate for children under five from 56 per 1,000 live births to 50 per 1,000 live births over the same period. But by last year, life expectancy had risen to 60 and the childhood mortality rate had fallen to 42 per 1,000 live births, according to the councils latest Rapid Mortality Surveillance Report. There had also been a marked improvement in the infant mortality rate, which was 30 per 1,000 live births last year, well ahead of the 2014 target of 36 per 1,000. "Within three years the targets have, somewhat unexpectedly, already been exceeded, with particularly good progress in 2011," the report read. The most significant age groups that showed a decline in mortality were babies under the age of one and young adults suggesting that this was due to improved access to antiretroviral medicines, said co-author Rob Dorrington, from the Centre for Actuarial Research at the University of Cape Town. Dr Motsoaledis spokesman Joe Maila welcomed the good news on Wednesday. "Its probably because of our HIV-treatment programmes, but we also think many more South Africans know their (HIV) status, so they are able to take good care of their health," he said. Prof Dorrington said the introduction of new childhood vaccines, improved access to water and sanitation, and increased breast-feeding rates may also have affected the under-five mortality rates.

18 October 2012 Business Day Page 1 Sam Mkokeli and Carol Paton Zuma leads bid for social pact to save SAs frayed image amid mine strikes PRESIDENT Jacob Zuma on Wednesday announced measures aimed at improving South Africas image, preventing strikes from spreading across the economy and at building social stability.

The strikes have led to two successive downgrades by ratings agencies, both citing concerns over South Africas long-term stability. In what is called a social pact, after a negotiating process involving several Cabinet ministers and business and labour organisations, it was agreed on Wednesday as an immediate measure that no further wage agreements would be reopened for renegotiation. The government also promised a new policing strategy aimed at showing that "the state is in control and visibly in charge", which it hoped would contain violence and intimidation. Speaking to journalists after the meeting, Mr Zuma said having considered domestic and international economic factors, the parties "emerged with one voice". "The parties agree to take steps to improve public and investor confidence in the economy and in social stability, using their respective resources and capacities to build a partnership for development," he said. He called on workers involved in illegal strikes to return to work, so that production in the mining industry could return to normal. The pact consists of a range of measures some new and some already existing grouped into three areas: measures to promote stability in the labour market; law and order measures; and a plan to address socioeconomic problems, particularly in mining towns. Economic Development Minister Ebrahim Patel, who led the negotiations, said the hard line being taken on unprocedural wage negotiations was essential to prevent strikes in the mining sector from spreading to the rest of the economy. While the government acknowledged that certain negotiation processes with workers were already under way and had to be resolved, all parties to the pact agreed that a line had been drawn that no one would cross. "We are sitting with an immediate crisis and we are putting out a marker about the approach to be taken. "The message is: dont let this become a practice across the economy," he said. A key aim of the pact is to prevent unions from "buckling under pressure" to join the wave of unrealistic wage demands, Mr Patel said. A task force will be set up to measure the progress emanating from this social dialogue, Mr Zuma said. The parties would identify common priority areas and specific roles for each other. Particular attention will be paid to the development of mining towns, and other ways to create new jobs. The agreement says a "crack team" will be deployed to municipalities in mining areas to "plan for the full housing and municipal infrastructure needs in specific areas and

address institutional capacity". Rustenburg, Lephalale, Emalahleni, West Rand, Welkom, Klerksdorp and Carletonville are first on the list. The parties also agreed to look for ways to speed up job creation through public infrastructure expenditure. Wednesdays session was a continuation of a meeting that started last week, at which leaders agreed to freeze salary rises and bonuses of bosses for a year. The organisations represented included the Congress of South African Trade Unions, the Federation of Unions of South Africa, National Council of Trade Unions and Business Unity South Africa. The language of the new plan walks a fine line between cracking the whip on illegal and violent strikes, but also gently nudging workers back to work. Mr Zuma said all the players wanted to send a message that all protests and industrial action must be conducted within the framework of the law. The plan devised on Wednesday is seeking to revive some of the tools used to mitigate the effect of the 2008 recession, such as schemes to keep struggling companies afloat and avert retrenchments. The government will extend the reach of the Training Layoff Fund, while R2bn will be availed to workers at risk. The government has undertaken to broaden its Expanded Public Works Programmes, from 502,000 full-time equivalent jobs to 685,000 full-time equivalent jobs in the financial year that starts in April next year. It also committed to speed up infrastructure projects it already started, as part of the R844.5bn three-year public sector capital plan. Unspent funds would be allocated to programmes that are "shovel-ready".

18 October 2012 Business Day Page 1 Evan Pickworth SAs leaders ignoring crises, says Loubser South Africas leaders are failing to recognise the serious problems facing the country, says former JSE CEO and former South African Airways (SAA) board member Russell Loubser, listing the Marikana killings and the Limpopo textbook debacle as two such crises that could have been avoided. Mr Loubser, in a public lecture at Wits University on Wednesday, had withering criticism for former African National Congress (ANC) Youth League leader Julius Malema, whom he called an arrogant racist with no work ethic. Mr Malema who is facing money-laundering charges is a leading proponent of the nationalisation of South Africas mines.

Mr Loubser also lambasted "constant, brainless talk about nationalisation". Mineral Resources Minister Susan Shabangu this week called on the ANC to put the controversial topic on ice at its December conference, but Mr Malema jumped on the nationalisation bandwagon again in Harare at the weekend. He said whites should "surrender" their land and mineral resources through bloodshed if necessary. Mr Loubser singled out Mr Malema when he spoke about a general "dropping of standards" and the rise of a poor work ethic that hinged on redistribution rather than value creation. "Todays youth league is not what it was under the likes of Nelson Mandela, Walter Sisulu and Oliver Tambo," he said. Mr Malema said on Wednesday he was not going to respond to people "trying to be important" and seeking "cheap publicity". Rolivhuwa Nelwamondo, ANC Youth League Limpopo chairman and an activist in the Economic Freedom Fighters group with Mr Malema, said Mr Loubser was just "a mouthpiece for capitalism". "He has a direct interest in exploiting our people in South Africa. He is a disgrace to this country," Mr Nelwamondo said. In the wake of ratings downgrades by Moodys two weeks ago and by Standard & Poors on Friday, Mr Loubser said confidence in South Africa could not be built in a climate of corruption, violent industrial action, the undermining of the judiciary and regulatory and tax uncertainty. But he believed that the lowering of standards went beyond the youth league and Mr Malema. "Our leaders seem unable to recognise a crisis," he said. The fact that some schools still did not have textbooks this year was not a problem, but a crisis. Mr Loubser said the strike at Lonmins Marikana mine in August, where more than 40 people were killed by strikers and the police, did not seem to have been recognised by South Africas leaders as a crisis. He said the massacre "should come as no surprise to anyone and wont be the last". "Many of these issues could have been avoided if we had leadership in South Africa. But we have lacked leadership for decades." Apartheid leaders did not see the crisis that would erupt when they ruined education, he said. With the strike action affecting sentiment badly, Mr Loubser said that while everyone had the right to strike, marchers should not "destroy everything in their paths" or carry weapons. Mr Loubser, who led a wave of resignations from the SAA board last month, said the R5bn guarantee provided by the government to the ailing national carrier would not help as it was "not cash".

"SAA was never capitalised properly during the three years I served on its board," he said. He questioned why the government with taxpayers money had three airline stakes, in SAA, SA Express and Mango, yet did not appear to support them financially or morally. "Warren Buffett would never put his money there (in an airline like SAA). Its the last place he would probably put his money," Mr Loubser said. He said there was nothing wrong with SAA and all it needed was support due to its tight 2% margin on R23bn turnover amid the ever-present threat of oil price rises which made up a third of input costs. Moodys and Standard & Poors cited concerns over institutional capacity and the five weeks of strikes affecting the economic policy framework. The downgrades will raise the cost of financing for public enterprises such as SAA and Eskom.

18 October 2012 The Times Page 6 Philani Nombembe

SA has 'lost its compass' Minister in the Presidency Trevor Manuel has questioned parents' involvement in their children's education. Manuel spoke at the launch of the "SA Child Gauge 2012", a report on children released by the University of Cape Town. The report says South Africa's children live in "unequal worlds", 18 years into democracy. "Recent events of the non-delivery of textbooks to [Limpopo] school children, dumping of textbooks and barring of children from attending schools by parents in parts of our country [are] a vivid demonstration... of the journey ahead. These events by parents and people in positions of authority are an indication of how we have lost our compass," said Manuel. "How did parents not know that their children have not received fresh textbooks for the new school year? Do parents, actually, keep track of whether their children have access to books? "Where were religious leaders when parents turned against their children in areas such as Olifantshoek and in the John Taolo Gaetsewe district and deprived them of education, their ticket to a better life?" The report found that the poorest 10% of the country's people received less than 1% of the national income, while the richest 10% received 57% of the income.

It also found that 60% of the country's children lived in households with an income of less than R575 a month. Racial disparities also exist, with 67% of African children living below the poverty line, compared with 2% of white children. The apartheid legacy also still has a hold on children. About 43% of young children live in poor conditions in the country's former homelands. The report found that difficulties in accessing birth certificates and IDs prevented many children from getting child support grants before their first birthdays, when nutritional support is most critical. "About 44% of healthcare expenditure goes to the private sector, yet it services only 15% of the population," reads the report. Many children rely on public healthcare, which employs only 31% of the country's doctors, 25% of specialists and 46% of professional nurses. The situation is even worse in rural areas as only 12% of doctors and 19% of nurses work there. The report also found that though the government spent a lot of money on education, "outcomes were persistently poor and highly unequal across schools". Said Manuel: "The work we are doing in the National Planning Commission is about the next generation. It is about addressing the forms of inequality that run all the way through South African society, and that, in many cases, affects children, especially in vulnerable and rural communities." 18 October 2012 The Times Page 4 Amukelani Chauke JZ wants CEO pay cuts President Jacob Zuma yesterday called on government and private-sector bosses to freeze their salary increases for a year. After meeting business, labour and community representatives at the National Economic Development and Labour Council, Zuma called on senior executives to deny themselves bonuses, perks and salary increases in a bid to narrow the nation's wage gap. A vast number of wildcat strikes, from the mining sector to the transport industry, have hit the economy. Zuma said tough times called for tough measures and senior executives should "tighten their belts as part of building a shared commitment to prosperity and growth". "[We] call on CEOs and executive directors in the private sector and senior executives in the public sector to agree to a freeze on increases in salaries and bonuses over the next 12 months, as a strong signal of a commitment to build an equitable economy.

"[We] call for an informed national conversation on income inequalities and how best to address them." Zuma did not take questions from journalists after briefing them. Approached for comment and clarity, his spokesman, Mac Maharaj referred queries to the Department of Economic Development, which in turn referred queries back to him. It is not clear whether "senior executives" referred to ministers, directors-general, heads of departments or CEOs of state-owned enterprises such as Denel and South African Airways. DA parliamentary leader Lindiwe Mazibuko lambasted Zuma's plan as being "short on detail". "To restore confidence in the South African economy, we need bold leadership with a clear plan, not more vague commitments discussed behind closed doors," she said. In July, Zuma's annual pay package was increased by 5.5% to R2.6-million. Finance Minister Pravin Gordhan called last year for pay increases in the public sector to be capped at 5%. Public Enterprises Minister Malusi Gigaba announced last month that he was finalising a pay model for CEOs of state-owned enterprises following concerns over their high salaries. LEADING BY EXAMPLE

EARLIER this month, Malawi President Joyce Banda announced she would slash her salary by 30% - from $60000 to $40000 a year as part of her government's austerity measures. In July, Banda, who found the Malawian economy in dire straits when she took over in April, sold the presidential jet and a fleet of luxury cars. In May, French President Francois Hollande slashed his salary and those of his cabinet ministers by 30% in a bid to trim the country's deficit and tackle unemployment. Former president Nelson Mandela in 1994 refused to board the "gravy train", cutting his salary from R1.4-million to R1.1-million a year.

18 October 2012 The Times Page 4 Quinton Mtyala

Police top brass still under fire

Police officers collectively lost 851 service weapons last year, but the SA Police Service top brass told parliament yesterday that not all th e cases were due to negligence. Only 300 officers had been charged for losing their weapons. National police commissioner Riah Phiyega and senior officers appeared for a second day before the police portfolio committee. Major-General Kaine Monyepao told the committee police officers were not always responsible for the loss of their firearms. It had to be determined whether their firearm was lost as a result of negligence. The committee asked about 16000 officers still without drivers' licences despite a 2010 order that all new recruits be able to drive. Phiyega said those who had repeatedly failed driver's tests would be moved to sections of the force where driving was not required. A significant number of disabled officers had been included in the overall figure of non-drivers. The committee wanted to know what was being done about the 27400 officers found not competent to handle firearms. The commissioner for human resources, Lieutenant-General Nobubele Mbekela, said 20104 police officers had not completed all their shooting training. "The standard requires that police have to be competent in three firearms, 9mm, shotgun and R5 rifle. You'll find that a person is competent [only] in one of them . but in terms of the system, they're incompetent," said Mbekela. She said a programme is in place to ensure all officers were competent by March next year. DA MP Dianne Kohler Barnard said this exposed police to litigation. "Should an active member of the SAPS shoot a civilian and [be] proved in court not to have the competency to handle a firearm it could be catastrophic. You will see your legal claims go through the roof."

18 October 2012 The Times Page 2 Franny Rabkin Gauntlett: I'm no Mother Teresa The Judicial Service Commission interview of Jeremy Gauntlett SC yesterday morning had far less drama than expected, with the commissioners and Gauntlett all on their best behaviour.

The JSC has overlooked Gauntlett for appointment three times - once for the Western Cape High Court and twice for the Constitutional Court - evoking intense criticism and fury in some quarters of the legal fraternity. A blistering 20-page submission to the JSC was made on Monday by former University of Cape Town deputy registrar Paul Ngobeni opposing Gauntlett's appointment to the Western Cape bench. And there was a last-minute flurry of correspondence in support of Gauntlett. The commissioners were restrained and respectful in their questioning of Gauntlett, which included queries about his exchange with Ngobeni, his relationship with Judge President John Hlophe and his reputation for being "acerbic". Referring to Ngobeni's submissions, Gauntlett said what he found "most distressing" about the last three days was that "it's very unfair, and it's very easy, to knock down somebody by saying all they are is somebody of a certain dermatology and background, and they don't give a damn". To questions on his judicial temperament, Gauntlett readily admitted that, as counsel, he was ''not, by any claim, Mother Teresa'' and that he had an ''impatient side''. But he said that in all his years as counsel and his 14 years on the bench of the appeal court of Lesotho, with 60 delivered judgments on that court, and as an acting judge in Cape Town, there had never been a complaint about him in his judicial capacity. Commissioner Dumisa Ntsebeza SC said he was concerned that, if Gauntlett were appointed, he would have a "toxic" relationship with Hlophe. Gauntlett is on the board of Freedom Under Law, which brought a complaint to the JSC about Hlophe. But Gauntlett did not see cause for concern. He said Hlophe had said that he did not see working with Gauntlett as a problem, and he had no objection to working with Hlophe.

16 October 2012 Cape Times/ RTE Staff African rhino poaching hits record on cancer cure claim A record number of African rhinos were illegally killed in South Africa this year, driven by the use of their horns in Chinese medicine and a spreading belief in Southeast Asia, unfounded in science, that they may cure cancer. A record number of African rhinos were illegally killed in South Africa this year, driven by the use of their horns in Chinese medicine and a spreading belief in Southeast Asia, unfounded in science, that they may cure cancer. The street value of rhinoceros horns has soared to about $65,000 a kilogramme, making it more expensive than gold.

South Africa, home to more than 20,000 rhinos, or about 90 percent of all the rhinos in Africa, lost 455 rhinos to poachers, as of Tuesday, to eclipse the 448 killed in all of 2011, the environment ministry said in a statement. Around 15 animals a year were lost a decade ago, showing the impact of rising demand from Asia. The number of rhinoceroses dying unnatural deaths in South Africa, either through illegal poaching or legal hunts, has now reached a level likely to lead to population decline, according to a study by Richard Emslie, an expert in the field. Poaching increased dramatically from about 2007 as a growing affluent class in China, Vietnam and Thailand began spending more on rhino horn for traditional medicine, where it was once used for ailments such as devil possession. About half of poaching takes place in Kruger National Park, the country's flagship park covering an area about the size of Israel, where soldiers and surveillance aircraft have been deployed in recent months to slow the carnage. The park has been the focal point of an arms race as gangs of poachers sponsored by international crime syndicates have used high-powered weaponry, night vision goggles and helicopters to hunt the animals, investigators said.

17 October 2012 Cape Times Page 4 Moloko Moloto Remove Zuma from Nkandla, says Juju Johannesburg - Julius Malema says President Jacob Zuma must be removed from his palatial Nkandla homestead when his term ends. The expelled former ANC Youth League president said on Tuesday night Zuma should not be allowed to stay in the house, which he said was built with taxpayers money, when he is out of office. He said Zuma, like other former presidents, should stay in his private house, built with his own money. Who said you are going to be president for life? asked Malema. That house is built on state money. That man, when he leaves, he must leave that house. We can use it for a boarding school, said Malema. He was addressing students at the University of Limpopos Turfloop campus last night. The building of Zumas Nkandla homestead has sparked a public outcry, after City Press revealed recently that the presidents private home would cost more than R200 million.

Subsequently, The Star reported that Zumas village and nearby areas would benefit from a R580m roads project. The government said the homestead, which has helipads and underground bunkers, would house foreign heads of state when they visit Zuma. Malema pulled no punches. What is the historical significance of Nkandla? What is there in Nkandla except mediocrity? he asked.

17 October 2012 Business Day Page 3 Sam Mkokeli and Hopewell Radebe Expert warns of turf war spreading in province IN THE wake of Mondays dramatic shooting outside the magistrates court in Ntuzuma, a researcher has warned that political violence is on the increase in KwaZulu-Natal. A member of the Inkatha Freedom Party (IFP), Siya Dlamini, was shot dead outside the Ntuzuma Magistrates Court on Monday in full view of the police and TV cameras. Mary de Haas, an independent researcher, said turf wars between the dominant parties, and competition for positions in the parties, often turned violent. At least 40 people had been killed in politically related incidents in the past two years, she said. Mondays shooting was, however, a new twist, as the violence had been predominantly in the hostels. Tensions between political parties have been heightened since Mondays killing, with the IFP on Tuesday criticising the police for what it said was a disappointing response to the shooting. IFP leader Mangosuthu Buthelezi on Tuesday blamed the National Freedom Party (NFP) for failing to instil peace in its ranks. "This brazen act of murder contradicts all the NFP has said about deploring violence. This is not a case of the leadership calling for peace while members on the ground struggle to forgo vengeance killings. This is a case of the leadership calling for peace, then taking out a gun and committing murder. The message to people on the ground is clear, and it contradicts the message expressed to the media," he said. "My deep concern is that political violence will continue if the message from political leaders is contradictory, muddied or disputed by the evidence." Other IFP leaders said it was difficult to trust police deployed in KwaMashu after the killing of their member outside the court.

"The minister of police (Nathi Mthethwa) should deploy police from other provinces to keep calm in areas of political violence in KwaZulu-Natal, clearly police from the province cannot be trusted," said spokesman Albert Mncwango. He said the IFP was disappointed by the police who were present when Mr Dlamini was shot dead. An NFP councillor who was arrested in connection with the shooting will appear in court on Wednesday. Mr Mncwango said police watched the drama unfold without doing anything while they were deployed there because of the volatile political situation. "Our South African Police Services behaviour is disappointing and proof that they cannot be trusted if a person can be killed like that in front of them." He said the NFP member produced a gun and fired two shots without the police "raising a brow". "In other countries, something like this would have not happened in the presence of the police. They would have not watched a person being shot at and killed in front of them. The police would have taken drastic steps to save that life and secure the safety of all the people present. But with our South African police, anything as shocking as Mondays killing is possible." Blessed Gwala, IFP leader in the KwaZulu-Natal legislature and spokesman on community safety and liaison, on Tuesday called on NFP leader Zanele MagwazaMsibi to bring her party to order, saying the party seemed to have followers who were "on a murderous rage". NFP secretary-general Nhlanhla Khubisa said 27 of their members have been killed since the partys formation two years ago. "People kill one another for self enrichment, driven by culture of entitlement." He said the police needed to rid the hostels of illegal arms and increase their visibility in order to avoid more deaths.

17 October 2012 Business Day Page 1 Natasha Marrian Cosatu endorses Zuma THE Congress of South African Trade Unions (Cosatu) is endorsing President Jacob Zumas re-election as president of the African National Congress (ANC) at the partys electoral conference at Mangaung in December. Cosatus support aided Mr Zumas rise to the top position in the ruling party in 2007, but their relations quickly soured. Cosatu general secretary Zwelinzima Vavis

mounting criticism of the ANC under Mr Zumas leadership, caused a rift in Cosatu, whose president Sdumo Dlamini is a staunch ally of Mr Zuma. Cosatu concluded its special central executive committee meeting on Tuesday, where it was decided to endorse Mr Zuma, ANC secretary-general Gwede Mantashe and party chairwoman Baleka Mbete. A trade union leader, who asked to remain anonymous, said Cosatu also supported Deputy President Kgalema Motlanthe, provided he did not accept nomination to challenge Mr Zuma. If Mr Motlanthe decided to make himself available for president of the ANC, Cosatu would "engage" with him about staying on as deputy president instead. Cosatu also wanted ANC treasurer-general Mathews Phosa and deputy secretary-general Thandi Modise out of the partys leadership. Most Cosatu affiliates told the meeting they wanted the ANC to adopt more radical policies to address inequality. They wanted Mr Zuma to be more "decisive" on issues of national interest and he had to be clearer about his "working class bias". At Cosatus congress last month a contest among its divided leadership was averted by a last-minute decision to retain its leadership en bloc. Mr Vavi said at the time that the ANC should learn from Cosatus approach. Cosatus preference for Mr Zuma seems to be more an attempt to help the ANC avoid another bruising leadership battle than a ringing endorsement of Mr Zumas leadership. According to another Cosatu source, Mr Vavi told the two-day meeting that it was important to "package" the federations endorsement appropriately in order to prevent "alienating" anyone. While Cosatu has opted to give most of the ANCs top six leaders another shot, it took a hard line stance towards the partys national executive committee. There was consensus on the need to evaluate and strengthen the ANCs national executive committee. Those elected to it should not be on the powerful leadership body if their sole focus was on securing tenders and business opportunities, the Cosatu affiliates decided. Cosatu spokesman Patrick Craven declined to comment, saying a statement on the outcomes of the meeting would be issued later.

17 October 2012 Business Day Page 1 Linda Ensor Treasury to keep grip on Limpopos finances

THE national governments intervention in Limpopo has to continue, despite the province being on track to post a budget surplus, as the capacity of its treasury and other departments had to be strengthened, the Treasury said on Tuesday. This news is unlikely to be welcomed by premier Cassel Mathale and his MECs, whose powers were taken over by national administrators last December. Limpopo health MEC Norman Mabasa on Tuesday expressed frustration over the lack of communication from the administrators, the absence of synergy in planning and decision-making and the lack of clarity on the powers MECs still had. Finance Minister Pravin Gordhan dismissed rumblings of discontent in the province, telling Parliaments standing committee on finance on Tuesday that "there is some propaganda" to undermine the intervention. "Clearly people who would have been benefiting from inappropriate access to public funds are going to squeal because those funds are no longer circulating," he said. Criminal charges had been laid with the police, or would be laid, in about 30 cases and there would be another 30 cases of disciplinary action against officials. Mr Gordhan said the national governments intervention in Limpopos treasury and its health, education, public works and roads and transport departments had worked well from a financial point of view. But it was too early "to pull back" as the situation in the province was not sustainable. The interministerial task team on Limpopo recently submitted a report to President Jacob Zuma. It summarised the progress and did not make far-reaching recommendations on further action by the national government. There had been varied levels of success in Limpopos departments, Mr Gordhan said. Health Minister Aaron Motsoaledi reported that Limpopos health department was doing "extremely well" and had brought service delivery under control. Some challenges in the Limpopo education department which is embroiled in a scandal over its failure to deliver textbooks still had to be addressed. Transport Minister Ben Martins had just appointed a new administrator for Limpopo and a public works team was still busy. The Treasurys head of intergovernmental relations, Kenneth Brown, said on Tuesday that the intervention had moved out of the stabilisation phase and into the recovery phase which could take some time to complete. The national governments withdrawal from Limpopo would require a decision by the Cabinet and would depend on the progress made by each of the five departments under national control. The Cabinet decided to intervene in Limpopo when it sought approval last year for a bank overdraft of about R1bn to pay salaries and wages.

The province would have ended the fiscal year with a R2bn deficit if it had been allowed to continue spending at the same rate. The Treasury helped to craft a 201213 budget on the basis of a R700m surplus, which Limpopo was on track to achieve. Mr Brown said that by end-September, Limpopo had R2.5bn cash in the bank, which would be rolled over for the rest of the year. By achieving efficiencies, it would post a budget surplus at the end of the fiscal year without having had to cut back on spending and without additional cash injections from the national government. "The first phase of the intervention was to stabilise the finances on an emergency basis. We are now entering the second phase, which is a recovery phase," Mr Brown said.

17 October 2012 Business Day Page 1 Franny Rabkin Hlophes shadow hangs over Gauntlet interview IN THE days leading up to the much-anticipated Judicial Service Commission (JSC) interviews for the Western Cape High Court, there was a rapid-fire volley of correspondence to the commission, all concerning Jeremy Gauntlett SC, one of the eight candidates to be interviewed on Wednesday. While interviews for the Western Cape High Court have tended to be dramatic, there is something about Mr Gauntlett that seems to ignite passions in the legal fraternity, both in the form of ardent admirers and virulent detractors. The usual comments from legal organisations on Mr Gauntletts candidacy were received weeks ago. It is understood that the Black Lawyers Association (BLA) and the Western Cape branch of Advocates for Transformation did not support Mr Gauntlett, while the Cape Bar Council did. But then on Monday and Tuesday, five additional letters were sent to the JSC in support of Mr Gauntlett: from Louis Harms, former deputy president of the Supreme Court of Appeal; from Supreme Court of Appeal Judge Carole Lewis; from some counsel at the Johannesburg Bar, including highly respected silks Patric Mtshaulana and Timothy Bruinders; from Archbishop Njongo Ndungane, chairman of the University of Cape Towns council; and from UCTs vice-chancellor, Max Price. Mr Gauntletts supporters spoke of his ethical integrity, his legal skill and his fearless independence and his commitment to "transformation" at UCT, on whose council he serves. But there was also a blistering 20-page submission by former UCT deputy registrar Paul Ngobeni, saying that Mr Gauntlett was "uniquely unfit" for appointment which then prompted an virulent exchange.

In his submission, Mr Ngobeni said Mr Gauntlett had "engaged in a pattern of attacking the JSC and (Western Cape) Judge President (John) Hlophe". Going all the way back to the 2006 Oasis scandal, Mr Ngobeni criticised Mr Gauntlett for calling for Judge Hlophes resignation when the JSC had "properly concluded that JP Hlophes ethical lapses" did not amount to gross misconduct. This was in "sharp contrast" to his attitude to Swazilands chief justice, Mathealira Ramodibedi, who has been condemned for his assaults on the independence of the judiciary and the rule of law in Swaziland and whose resignation Mr Gauntlett has never called for, said Mr Ngobeni. Mr Ngobeni attributed this "deafening silence" to the fact that when Mr Gauntlett was overlooked for appointment to the Western Cape High Court in 2010, Judge Ramodibedi had, together with other judges of the appeal court in Lesotho, written a letter expressing their dismay. Mr Ngobeni also called on the JSC to ask Mr Gauntlett to distance himself from his supporters who had succumbed to "angry white boy syndrome" blaming the nonappointment of white men on affirmative action. In a response on Monday, Mr Gauntlett said Mr Ngobeni was "seeking to raise past statements" and that his relationship with Judge Hlophe was now "a correct professional relationship" after Judge Hlophe had expressed regret at things he had said before. Mr Gauntlett said it was not true that he stood idly by over recent events in Swaziland and was involved in "important initiatives" to resolve matters. He added that Mr Ngobeni had not disclosed that he had been Judge Hlophes "legal adviser" and had singled Mr Gauntlett out for criticism because Mr Gauntlett had been part of a UCT council that authorised an inquiry into Mr Ngobenis appointment as deputy registrar. "Charges included his failure to disclose his disbarment in the US and criminal convictions. Ultimately he agreed to leave," said Mr Gauntlett. On Monday evening came Mr Ngobenis response. He said he had never been Judge Hlophes legal adviser and that Mr Gauntletts portrayal of his fall-out with UCT constituted "gross lack of candour". The truth was that after an investigation, the university had found he had no criminal conviction, and that UCT had ultimately to apologise. At a later, separate, disciplinary hearing on an opinion article he had written, he was once again cleared.

14 October 2012 The Sunday Independent Staff Public Protector Madonselas office is our only hope Feared by corrupt public representatives and the powerful, loved by the powerless and envied by her peers, the Public Protector has restored the public faith at a time when accountability and transparency are seemingly cast aside to pave the way for legalised corruption.

Thuli Madonsela has fought fiercely against those who believe they can plunder our coffers and abuse public office as long as it can be explained away through the notorious ministerial handbook or other political sophistry, bureaucratic obfuscation and legal inexactitudes. She is not a saint though. She makes mistakes. She sometimes gives in to public exasperation, resulting in her telling us what we want to hear. It works for her. But it could soon dent the credibility of her office. This is how the integrity of the elite police unit, the Scorpions, was damaged (notwithstanding the bullying by the Polokwane leadership of the ANC). Scorpion bosses were intoxicated by the media hype, raw power, public glory and political mood. But Madonsela her ego and weaknesses aside has reaffirmed the centrality of accountability and transparency when other public institutions have failed to carry out their mandate of holding the powerful accountable. As I said before, the Public Service Commission, a crucial watchdog body, has been largely ignored in spite of its warnings. It has carried out thorough research regarding the state of our public service and its impact on governance and administration. But its reports are gathering dust somewhere in Pretoria. Another institution with a watchdog role is Parliament. But members of Parliament, who are supposed to be the guardians of democracy, have become the hacklers of opposition and cheerleaders of the executive. Even after ANC secretary-general Gwede Mantashe urged MPs, after the 2009 elections, to be tough with the executive by asking pertinent questions, the majority of parliamentarians remain sycophants, applauding the presidents bland jokes and howling at the slightest provocation from the opposition. They have become an extension of the party caucus, forgetting that they were elected by the people of SA. They believe they owe their loyalty to the party delegates who nominated them to the party list. They owe their allegiance to the party leaders who have the power to elevate their careers. This is why some of the ministers, and senior civil servants, treat parliamentary committees with contempt. Therefore, Madonselas office (and to some extent the media and the judiciary) is our only hope. It is sad that its work is hampered by inadequate staffing and lack of funds, while its workload has increased over the past year. She told the National Assemblys portfolio committee on Justice that her investigators were assigned more than 400 cases each. This means, she admitted, they will not do justice to these cases. Her office received 20 000 complaints last year. Her problems are compounded by recalcitrant government departments.

While some in the committee have proposed a name-and-shame approach, this will not work. The unco-operative departmental officials dont care. The Public Protector must apply the law. Section 11 (3 and 4) of the Public Protector Act states that any person who refuses to comply with the direction of the Public Protector or refuses to answer questions is guilty of an offence and is liable to imprisonment or fine (or both).

15 October 2012 IOL Peta Thornycroft Jujus goons attacked Zimjournos Zimbabwe - Julius Malemas security crew allegedly attacked journalists from a Harare Sunday newspaper when they tried to interview him at a restaurant on Saturday. The journalists, working for the Sunday edition of The Daily News, reported this to police and have a case number. According to the journalists, Bhethule Nkiwane, a photographer, was manhandled by three heavily built men as he tried to take photos of Malema and his entourage of about 12 people as they went into a restaurant. Associated Newspapers of Zimbabwe (ANZ) group editor Stanley Gama said he witnessed the incident. In the heat of the five-minute scuffle, the bouncers took away Nkiwanes photographic memory card after forcing him to delete photos of Malema. Gama said his young photographer had also lost other valuable photos from the weeks prior to the mad and unprovoked assault. Malema seemed calm and appeared interested in talking to my colleagues after exchanging pleasantries and greetings. But after the introductions, the goons pushed him aside and told our reporter to go to hell. It was sudden and unexpected, Gama said. At the eatery, Malemas team spent R1 400 on food. The Daily News on Sunday reported that hours after he arrived in Harare on Friday, Malema attended a lavish party hosted by a top Zanu-PF official in the leafy suburb of Highlands. Malema told Independent Newspapers that he had travelled to Harare purely to attend the wedding of a Zanu-PF official, but his spokesman, Floyd Shivambu, had put out a statement last week, saying the main purpose was to engage with Zimbabweans to advance economic freedom.

14 October 2012 Business Day Loni Prinsloo NUM blames Malema for wildcat strikes THE wildcat strikes that have been devastating South African mines and ended the lives of many were a highly organised affair to promote the cause of nationalisation of the country's mines and overthrow current leadership structures, the general secretary of the National Union of Mineworkers (NUM), Frans Baleni, said on Friday. He claimed in an interview that former ANC Youth League (ANCYL) leaders, now parading under the banners of Friends of the Youth League and/or Economic Freedom Fighters, had been mobilising resources, weapons and legal support as early as 2011 in an effort to destabilise the country's mines. Julius Malema, former leader of the ANCYL, had been the leading voice calling for the nationalisation of mines. "The plan originally was to get NUM leaders preferred by the ANCYL into power at our 2012 congress earlier this year. However, when that did not happen, ANCYL leaders looked for a different alliance, which I believe they found in Amcu [Association of Mineworkers and Construction Union]," said Baleni. Baleni also claimed that money was involved in the organisation of these strikes and that ringleaders were being paid off to ensure their cooperation. A source in the gold-mining industry said there were strong rumours that money was flowing from the so-called "Anyone But Zuma" campaign to organisers set on destabilising the sector. The source said the strikes were too well planned across different sectors and in different parts of the country not to have a mastermind behind them. "Where there's smoke, there usually is a fire," he said. Solidarity general secretary Gideon du Plessis said the strike that broke out at Kumba Iron Ore's Sishen mine, where miners had received large payouts in December, as well as dividends and above-inflation increases just two months ago, proved that the strikes were not really about wages. "It only takes a couple of people to intimidate the masses and create anarchy, as we saw at the Sishen mine where 300 workers have now caused the mine to shut down completely," said Du Plessis. He said that the excessive and unaffordable wage increases demanded by illegally striking mineworkers showed that an end to the strikes was not a priority. He said this was especially true in light of the fact that most mineworkers had signed agreements through the NUM during the past three to 12 months. "One has to ask yourself what changed all of a sudden; what sparked the unhappiness? There is definitely something strange going on," said Du Plessis.

The NUM has been South Africa's majority mining union for almost three decades. It has strong links to the ruling ANC through its union federation Cosatu. NUM has stated that it does not support a blanket nationalisation of the mines. The illegal strikes have cost the NUM tens of thousands of members. This year, 13 NUM shop stewards have been assassinated, Baleni said. NUM's membership at Impala Platinum, where an illegal strike halted production for six weeks at the beginning of the year, has dropped to 13%. Other displays of unhappiness with the union have included burning a mock coffin filled with NUM shirts at Samancor's operations in Rustenburg and workers marching to NUM's regional offices demanding that their memberships be terminated. Franz Stehring, divisional manager at trade union Uasa, said the NUM lost favour with the Friends of the Youth League when it came out against a policy of nationalisation. He agreed that Malema was behind efforts to destabilise the mines, but could not confirm whether or not there was a definite connection between Malema and Amcu head Joseph Mathenjwa. Many workers have distanced themselves from unions, preferring to represent themselves independently, but Baleni said this is a guise used by Amcu and Malema to avoid prosecution for organising the illegal strikes. Baleni was disappointed that government officials had been "lame ducks" in not dealing with the unlawful strikes. Stehring hoped strikes would calm down after candidates for the ANC's Mangaung elective conference had been nominated. "Then Malema will see whether he will have a voice or not at Mangaung, and whether he could continue to push the nationalisation agenda or not."

15 October 2012 Business Day Page 8 Peter Bruce The Thick End of the Wedge ANOTHER week, another downgrade. If this gets any more regular well be able to calculate to the day how long it took the African National Congress (ANC) to shut down the economy as an investment prospect. One is tempted to blame President Jacob Zuma but there are a few problems with that. First, he probably doesnt read the press. Second, he might miss the point and third, as he keeps saying, he is only doing what the ANC asks him to do. Some ideologically unencumbered ministers know whats going on. Pravin Gordhan does. So, evidently, does Susan Shabangu. The fact is, the investing world is losing

patience with South Africa really quickly now. We may retain some sort of geopolitical significance, mainly by virtue of our location (pretty much the only thing the ANC cant "transform") but were becoming the sort of place only investors with shiny suits will take seriously. The litany of poor judgments, bad policy, rotten leadership, political division, blatant corruption and just plain embarrassment that Zuma has brought to the highest office in the land is too long to list in a column as tight as this. Suffice to say, we are all about to pay the price for the ANC having elected him, and for the probability that theyll do so again. The price will look something like this: violent strikes, political uncertainty and an inability to put the nationalisation bogey away will, in an already skittish and uncertain investment world, encourage long-term investors to look elsewhere. The value of the rand will fall. Because under the ANC the economy has deindustrialised, we now import more ordinary things and they will cost more. But we will keep importing them and that will force prices up making it more expensive to run businesses and people will lose their jobs. Theres more, but you get my drift Zuma has been, effectively, silent during the wave of strikes of the past few months. His inability to lead is breathtaking. He had a meeting last Friday with business and union and government leaders, but one wonders why. Did he have anything to tell them they dont already know? No. The meeting appears to have been designed so they could tell him what the hell is going on. What would be the point of telling him? Oh, Sir, the state, under your leadership, is collapsing. The economy is on the verge of falling below generally accepted investment grade levels. What are you going to do? We know the answer is "nothing, because anything I do to clean up the mess Ive made could trigger a threat to my personal and political comfort". In the middle of the wider Zuma Calamity, it is comforting to hear and read middleclass black SA standing up for what is right. The most recent columns from Barney Mthombothi and Mondli Makhanya are outstanding for their courage. An open letter from Kay Sexwale to the few Rivonia trialists still living yesterday was equally wonderful, particularly as she hails from one of the ANCs royal families. Describing her agony over whether, or how, to continue voting for the party that liberated her, she comes to a powerful conclusion: "I dont know who I will vote for (in 2014). All I know is that Jacob Zuma will never again hold office with my consent." I was also very excited to see the Black Business Council (BBC) hold a conference last week on the subject of creating black industrialists. Such people are exactly what the country needs. They are not, however, what the ANC needs. You cannot run an independent manufacturing business in the economic climate the party has created. You need to export and import, both made impossible by a wildly volatile currency. You need to hire and fire as economically as possible, both made impossible by ANC labour laws. The BBC is still very close to the ANC but that is one marriage that would not survive real black industrialisation. Just as the old National Party became a direct threat to Afrikaner wealth, so soon will the ANC become a threat to black wealth. Then all bets are off.

15 October 2012

Business Day Page 8 Editorial Time to pull in one direction IN MAY, Trade and Industry Minister Rob Davies told delegates to the Southern African Development Communitys Mainichi Forum in Japan that Africa has one of the most promising economies in the world in terms of growth potential. But the ministers claim rings hollow in the light of South Africas recent performance relative to its continental emerging market peers. Many observers would say policy making in South Africa is far removed from economic realities. President Jacob Zumas decision at the weekend to step in and summon business, labour and civil society leaders to a meeting in Pretoria is therefore to be welcomed. For much of South Africas democratic history, the political alliance between the ruling party and the countrys dominant trade union federation has resulted in established business being sidelined and excluded from the policy formulation process. This was a grave error on the part of the African National Congress, one whose repercussions are now being felt as South Africas economic and social indicators start to dive. Fridays decision by Standard & Poors (S&P) to cut South Africas sovereign debt rating will not help matters, but it could have been avoided. The South African Chamber of Commerce and Industrys business confidence index for last month broadly illustrates South Africas woes: it averaged 100 in 2010 but dropped to 91.7 by last month 6.7 points below September last year. Recent developments in the labour market weighed heavily on the index. Year on year, 11 of the 13 sub indices declined and only two were positive. The chamber points out that this is a dramatic turnaround from August this year, when nine sub indices made a positive contribution to the business climate. The S&P and Moodys rating downgrades stem directly from the recent prolonged strike action in South Africa, as well as the Marikana killings. These have grave potential knock-on effects for Africas largest and most modern economy, which is why Reserve Bank governor Gill Marcus is urging the government to address the "real issues" raised by the rating agencies. The chamber also notes South Africas loss of two positions in World Economic Forum competitiveness rankings to 52 from 50 out of 144 countries. The country competes worst in health, primary education and labour markets, while financial markets and market size are where its strengths in competitiveness lie. The chamber says it "trusts that policy decisions and implementation by government would be dedicated to turning this decline in competitiveness and credit ratings." But many policy decisions made by the Department of Trade and Industry appear to militate against this possibility. Law firm Webber Wentzel has warned of a possible "further blow" to investor confidence after the government said last month it would not renew bilateral investment treaties with various European Union states when they expire. The department says their prescriptions get in the way of "transforming" the South African economy, but Webber Wentzel points out that the decision may result in less protection for foreign investors, especially if measures are taken to nationalise parts of the economy.

The move also appears designed to enable the state to push through more aggressive policies on broad-based black economic empowerment (BBBEE). Some domestic and foreign investors in South Africas mining space have already tested this policy in court, claiming their investments in mineral rights were expropriated under the 2004 Minerals and Petroleum Resources Development Act. But early this month, Mr Davies told delegates at the launch of the revised BBBEE Codes of Good Practice in Midrand that such intervention remained an imperative in South Africa. He is right, but that does not mean such policies do not have consequences, some of which could be unwelcome. In this respect, Mr Davies has launched a raft of legislation that is in the process of working its way through Parliament and into law. He recently gazetted the Property Sector Code in terms of the BBBEE Act of 2003, which requires property companies to ensure 35% of their assets go to black-owned enterprises with a BBBEE status of Level 1 to Level 3 when they engage in disposals. This month, the Department of Agriculture, Forestry and Fisheries, together with the AgriBEE Charter Council, announced a review of the annual turnover thresholds for AgriBEE. It is not known what this review will entail, but it is clear to many in the sector that the concerns raised repeatedly by business and civil society about the effects of increasingly onerous BBBEE measures on their ability to operate profitably are seldom, if ever, taken into account. Mr Zumas summit was long overdue but it should not stop at finding solutions to the recent wave of violent unprotected strikes and general breakdown of the collective bargaining system. The structural problems in the labour market need to be addressed including the fact that entry-level wages are often inadequate, although there will be consequences to raising them artificially too but so does the government and trade unions tendency to treat business as a cash cow that can be milked indefinitely. South Africas competitiveness is declining and, if the country is to achieve the goal of reducing poverty, inequality and unemployment, all three players need to pull in the same direction. At the moment, two of those players are so focused on achieving their own short-term political goals that they seem oblivious to the fact that they are succeeding only in pulling the country down.

15 October 2012 Business Day Page 3 Stephen Grootes Unlikely ANC will try to unseat Madonsela REPORTS on Sunday that Public Protector Thuli Madonsela is again under pressure through leaks from her office and African National Congress (ANC) office-bearers do not appear to surprise those familiar with her findings. Ms Madonsela is perceived as a champion by those who believe the ANC is corrupt. As a result, it was only a matter of time before some ANC members would move against her. However, the constitution makes it very difficult to remove her. In addition, public opinion appears to back her.

Ms Madonsela was appointed in 2009, in a move that surprised those who knew her. She was described as independent, which appeared to mark a change from her predecessor, Lawrence Mushwana, who seemed to perennially rule in favour of the government, or the ANC. In the only case in which he had to rule on a matter involving different ANC groups, he sided with President Jacob Zuma. When he left office, it was with a R7m golden handshake. Days later, the ANC-dominated Parliament appointed him chairman of the Human Rights Commission. But Ms Madonselas track record is very different. Her investigation into former national police commissioner Bheki Cele until that point an ally of Mr Zuma saw Mr Zuma dismiss Mr Cele and public works minister Gwen Mahlangu-Nkabinde, amid growing public pressure. When Ms Madonsela was pulled into the furore over allegations of kickbacks to former ANC Youth League leader Julius Malema from Limpopo provincial government contracts, her final report appeared to damn Mr Malema. Now it appears that her deputy, Mamiki Shai, is one of the people mobilising against her, by writing a dossier to Parliament claiming she is biased in favour of the Democratic Alliance. This claim, with several others, could lead to a parliamentary investigation. And in April Higher Education Minister Blade Nzimande accused Ms Madonsela of being selective in her investigations, asking why an investigation into the South African Broadcasting Corporation should take a long time, while that against the South African Police Service was concluded within weeks. Ms Madonsela told a parliamentary committee on Friday that Mr Nzimande had not responded to her queries. However, the constitution treats the office of the public protector as it does that of the auditor-general. By doing so, it appears to elevate these two offices above those of the other chapter nine institutions. A public protector is appointed to a nonrenewable term of seven years. The document says she can only be removed from office after a finding by Parliament of "misconduct, incapacity or incompetence". A two-thirds majority in the National Assembly is needed to impeach her which the ANC does not have. At the same time, Ms Madonselas supporters include virtually all of the opposition parties. It has become a popular tactic to report perceived wrongdoing by ANC officials to her office. The ANC could also feel the backlash from its efforts to push through the Protection of State Information Bill, which saw all the opposition parties vote together against it for the first time. It is possible this unity would be used in defence of the public protector. It is also very likely that there would be a vociferous public campaign to protect her, and the ANC would be painted as trying to steam-roll a constitutionally protected office that acts independently.

These factors make it unlikely that the party would unseat her.

15 October 2012 Business Day Page 3 Carol Paton Wage restraint agreed for SAs top earners A 12-MONTH salary freeze for all top industry executives and government leaders from President Jacob Zuma down is one of a number of measures already agreed upon by government, business and labour representatives to try to arrest the wave of illegal strikes sweeping the country. An urgent meeting of the three social partners was convened on Friday evening by Mr Zuma. The meeting aimed to put together a stakeholder agreement which would set out measures and time frames to normalise industrial relations and restore investor confidence. Two successive downgrades by ratings agencies Moodys and Standard & Poors the latest announced on Friday just before the summit have rattled Mr Zuma and his Cabinet and prompted appeals by both Reserve Bank governor Gill Marcus and Finance Minister Pravin Gordhan that government take steps to deal with the crisis. The tripartite meeting will convene again on Wednesday, after which participants hope to announce a package of measures to calm striking workers and demonstrate to investors that the government is addressing their concerns. However, several participants said there was already consensus that the 12-month salary freeze for those at the top should be among the immediate measures agreed to. South Africa is among the countries with the highest income disparities in the world. The Gini coefficient, a measure of inequality, has widened further in the postapartheid period to 0.7 from 0.66 in 1994. Mr Zuma and all public representatives were in April awarded a 5.5% wage increase, which took the presidents package to R2.6m. Business Unity South Africa president Jabu Mabuza said there was a general recognition that income disparities were playing a role in fuelling strikers anger. "All executives, starting from the president to executives in business, will be asked to show restraint. We must show that we are not only expecting workers to tighten their belts by agreeing not to take salary increases for at least 12 months . It is wrong that while people are dying for R12,500 a month, there are displays of obscene wealth," Mr Mabuza said. Congress of South African Trade Unions (Cosatu) president Sdumo Dlamini said executive wage restraint would help to promote social cohesion.

"If everyone in the executive and executives in the private sector takes a decision for wage restraint, it will send a strong message that we are confronting the triple challenge of poverty, unemployment and inequality," he said. The rest of the package is under negotiation by a task team of two representatives from each constituency taking part. The agreement will also give greater effect to government programmes. One area will be housing, where discussions are taking place with particular focus on mining communities, where informal housing and the absence of basic services feature strongly in complaints.

15 October 2012 Business Day Page 2 Natasha Marrian Cosatu to discuss ANC leadership THE Congress of South African Trade Unions (Cosatu) is set to hold a special meeting on Monday of its top brass to discuss the African National Congress leadership question, but the shadow of the labour unrest in the mining sector is likely to loom large over the talks. The federation deferred key discussions at its national congress last month, opting to allow the central executive committee (CEC) to take the talks forward. The unprotected strikes in the mining sector has threatened the countrys collective bargaining regime and left unions on the back-foot as they battle to take forward worker demands made outside ordinary bargaining processes. The key discussion to take place as the CEC meets centres on the leadership question in the ANC, and the federation looks set to endorse President Jacob Zuma for a second term, ahead of the partys internal election in December. The Cosatu affiliate who appeared most likely to oppose his bid for a second term, the National Union of Metalworkers of South Africa (Numsa), came out in his support ahead of Cosatus national congress last month. Mr Zuma already enjoyed the support of the leadership of Cosatus other heavyweight affiliates, the National Union of Mineworkers (NUM), the National Education, Health and Allied Workers Union (Nehawu) and the South African Democratic Teachers Union (Sadtu). Cosatu has a standing resolution to support the leadership elected in Polokwane, and to refrain from pronouncing on the ANCs leadership question as it had done in 2007. The federation played a key role in Mr Zumas rise to the helm of the ANC during his battle with former president Thabo Mbeki. But the cracks in the alliance quickly emerged after Mr Zumas election as the federation grew increasingly critical of the ANC.

Cosatu general secretary Zwelinzima Vavi last week criticised South Africas leadership "at the highest levels" for failing to drive the implementation of the policies. Numsa wants the federation to play a role in the ANC leadership selection and has also resolved to influence the other affiliates to pronounce on the matter. Numsa has expressed reservation about the ANCs other officials and its national executive committee and according to an insider, it wants the federation to audit the balance of the partys top brass. Cosatu leaders are also likely to examine the current strikes in the country, said its president Sdumo Dlamini. Both Finance Minister Pravin Gordhan and Reserve Bank governor Gill Marcus have warned about the negative effects of the mining strikes on growth. The wildcat strikes spread across the country after workers at Lonmins Marikana operations downed tools in an unprotected strike in August. Workers have largely shunned mines and sidestepped collective bargaining processes in a bid to secure wage increases. Unions leaders on the ground were also being targeted and killed in a number of mines with over 50 deaths so far, 34 in a standoff with police at Marikana. Talks between the Chamber of Mines, unions and the labour department were continuing to resolve the impasse. The three-week long truckers strike concluded on Friday with a wage deal between Cosatu affiliate, the South African Transport and Allied Workers Union, three other unions and the Road Freight Employers Association.

15 October 2012 Business Day Page 2 Paul Vecchiatto Transnet R302bn expansion stams on TRANSNET will continue with its R302bn capital expansion programme despite the weakness of the South African and global economies, says Transnet Port Terminals CEO Karl Socikwa. Speaking at the Cape Chamber of Commerces exporter of the year awards last week, Mr Socikwa said the transport logistics company had to press ahead. " We cannot be discouraged by the set of circumstances we are operating in." The Transnet capital expansion programme was announced by President Jacob Zuma during the state of the nation address in February. It would include huge

investments into the Durban-Johannesburg transport corridor and manganese export facilities through the port of Ngqura in Port Elizabeth. Transnet CEO Brian Molefe said in June the group planned to float a $500m foreign currency bond to help with this capital expansion. Mr Socikwa referred to South Africas economic problems including slow gross domestic product growth rate of less than 2.7% for this year and a spate of labour unrest. Further, the economic crisis in Europe and the slowing growth of China were other factors that had a bearing on South Africa. These factors threatened Transnets expansion, but abandoning it now was not an option. "We have to press on, but smarter, focused and more innovative," Mr Socikwa said. "We must continue to invest through the sandstorm (as) the delivery of a modern supply-chain platform is vital for sustained growth to better get through the crisis." Mr Socikwa said Transnet needed to reassure investors that it would be able to operate the new and upgraded facilities sustainably. This was key as the company went about raising money for the programme through bond sales. Temi Ofong, Absa Capitals head of corporate banking, said the co-ordinated economic stimulus measures by the European Central Bank, the Bank of England, the Peoples Bank of China, the Bank of Japan and US Federal Reserve, should improve the global outlook. These would help to contain the extent of the global economic slowdown and debt crises in Europe. Further, the stimulus measures boded well, particularly for economies that were linked with commodity exports. Mr Ofong said the recent weakness of the rand would help to improve South Africas competitive advantage. "We would regard the rand now undervalued by as much as 9% on a real effective exchange rate basis ." Cape Chamber of Commerce deputy president Gordon Meter said business welcomed the commitment to the expansion plan. "The money spent on infrastructure has to plan (for) the future when exports rise," he said. "Most of the work should at least have started, if not completed ." Transnet had to expedite plans to make the Cape an attractive destination for the refurbishment of oil and gas offshore rigs. "Last year we had 168 rigs pass the Cape but few stopped for refurbishment (due to) the limited capacity of the ports," Mr Meter said.

15 October 2012 Business Day Page 1

Paul Vecchiatto Public protector claims knives out for her PUBLIC Protector Thuli Madonsela says she has been told there is a move by senior African National Congress (ANC) members to drive her out of office, with the person orchestrating the campaign having been promised a job within the ruling party. Ms Madonsela said: "The whistle-blower told me in July (that a person), whose name was given to me, is asking members of the public to come up with a petition to have me impeached, as key members of the ANC had promised her a job. "Unfortunately, I asked the whistle-blower to give me documentation, but he never did. I have also been told the investigation into On-Point Engineering would cost me." The probe of On-Point in which former ANC Youth League president Julius Malemas family trust has shares has unveiled a raft of dodgy tenders and recommended legal action against the owners. ANC spokesman Keith Khoza said yesterday the party would not be part of any attack against the public protector. "As far as we are concerned, the public protector has never deviated from the legal mandate of her office and our view is that she be allowed to continue." Ms Madonsela was responding to reports in the Sunday Times that MPs were questioning her partiality. She said that she had first informed Parliament about the allegations against her and requested an investigation. "Parliament will do its own investigation, which I expect, will include hearing from others. "But the truth is in the documentation that I supplied." Deputy public protector Mamiki Shai has presented a dossier to Parliament which contains allegations that Ms Madonsela interfered with and soft-peddled in investigations into Democratic Alliance -run areas, including Midvaal municipality. Ms Madonsela said she had set up a task team to investigate the allegations with the aim of preparing a report for Parliament. "I asked the deputy public protector (Ms Shai), who chairs the good governance and integrity committee, to convene a subcommittee (to probe the matter)." 15 October 2012 Business Day Page 1 Mariam Isa Markets to take knock after S&P downgrade LOCAL markets are set to take a knock this week after Standard & Poors (S&P) unexpectedly downgraded South Africas sovereign credit rating on Friday and warned that strikes in the mining sector are likely to threaten the countrys economic policy framework.

S&P kept a negative outlook on its BBB rating for South Africa, saying that "the political, economic and fiscal ramifications of South Africas social tensions could deteriorate" beyond its expectations. The decision by S&P followed a downgrade by Moodys two weeks ago, but its new rating puts South Africa one level below the credit assessments of the other two top rating agencies, Moodys and Fitch. "This is a warning that we need to get things right the direction events are taking at the moment is very worrisome," said Nedbank economist Isaac Matshego. "Im fearful about the outlook. If things continue as they are, we are going to fall into junk category." S&Ps rating for South Africa is two notches above the level classified as "junk", which refers to government bonds that are considered speculative rather than investment grade. Credit ratings matter as they help determine a countrys cost of borrowing and affect investor appetite for local assets, such as equities, bonds and currencies. S&P made it very clear that it would downgrade South Africa again if the electoral conference of the African National Congress (ANC) in December set a policy framework that it viewed as "deviating" from a path of fiscal consolidation. If the ANC elected Deputy President Kgalema Motlanthe as its leader in place of President Jacob Zuma, it was unlikely to lead to a substantial policy shift, but could increase uncertainty ahead of the 2014 election, S&P said. Rating agencies were expected to wait until the conference in Mangaung before making decisions on South Africa. Fitch has a negative outlook on its credit rating for South Africa, which it is expected to downgrade ahead of the conference. Absa Capital economist Mamokete Lijane said in a research note that he expected the S&P decision to be "very negative" for local markets. "We expect to start the week on the back foot as investors digest the implications of this announcement," he said. The rand weakened to R8.73/$ from R8.65/$ after the announcement late on Friday, but analysts say more losses are likely this week as the news broke after domestic markets had closed. Meganomics economist Colen Garrow said the rand could slide to R9.25/$ this week. Domestic bonds were also likely to suffer, as foreign demand had already soured after the Moodys downgrade and as unrest in the mining sector spread, he said. "This is a big vote of no confidence in South Africa," Mr Garrow said. Thousands of workers at AngloGold Ashanti, Gold Fields, Anglo American Platinum and Harmony are still on strike, after miners at Lonmins Marikana mine clinched a double-digit pay rise before returning to work. The unrest has often turned violent, with nearly 50 people killed during the stoppage at Marikana, including 34 who were gunned down by police.

"We see an increased likelihood that the ANC will take on board more populist elements for its policy framework in the lead-up to the 2014 presidential elections," S&P said. This would translate into "amplified spending pressures" and reduce the fiscal flexibility of the government. The Treasury said it believed that its fiscal plan was "realistic and achievable". "There is no historical evidence to support S&Ps assertion that underlying social tensions will increase government spending pressure," it said. S&P acknowledged that the Treasurys medium-term budget policy statement, due later this month, was unlikely to indicate "major fiscal slippage" but said the commitment to fiscal prudence could be "challenged" at the ANC conference. There was also a risk that public sector wages and debt costs could rise more than expected, it noted. In February, the Treasury pledged to reduce its budget deficit to about 3% of gross domestic product (GDP) by the financial year 2014-15, from 4.6% in 2012-13. S&P said it did not expect the economy to grow by more than 2.5% this year, reflecting the weaker business and investment climate and output losses from the mining strikes. "In our view, labour relations could become more tense and higher wage settlements may lower the competitiveness of South Africas labour-intensive mining industry." S&P sees South Africas deficit on its current account widening to 5.1% of GDP this year from 3.3% last year. That is a worry as the shortfall is financed mainly by foreign purchases of local shares and bonds, which would be hurt if sentiment towards South Africa deteriorates.

15 October 2012 The Times Sapa SA has highest social inequality in BRICS: report

A German report has lauded South Africa's economic policy, but also said that we have the highest level of social inequality in the BRICS countries. The report by the Bertelsmann foundation lauded South Africa for its economic stability, reduction of state debt and strengthening of social welfare policies, but said it held a "middling" position within the BRICS, due in large part the poor performance of its education system and labour market. It also said South Africa has the highest level of social inequality in the grouping. The world's five emerging economic powerhouses will experience significantly slower growth if they delay in implementing key political reforms, the Bertelsmann foundation warned. The report said the five BRICS countries - Brazil, Russia, India, China and South Africa - must focus on creating competent and stable political institutions and

improving their education, health and judicial systems in order to achieve sustainable growth. Brazil, which the report says has halved incidences of extreme poverty and moved 20 million people into the middle class in the last decade, was called "the most promising of the BRICS states" because of its institutional reforms and infrastructure improvements. The "worst-performing" country in the comparative study was Russia, which suffers from "a unilateral economic strategy, patronage and the lack of involvement of civil society." It said Russia must diversify its economy by overcoming its reliance on natural resources. The Bertelsmann report, titled "Sustainable Governance in the BRICS," said the results for China were "ambivalent" as the country grapples with problems related to demography, social inequality and pollution. India too is plagued by "enormous regional and social imbalances," as well as infrastructure shortfalls and widespread corruption, which hinder growth. The five countries are home to 42 per cent of the world population and make up some 18 per cent of global gross domestic product (GDP). Goldman Sachs, the investment group that coined the BRICS acronym in 2001, forecasts the countries to account for some 40 per cent of global GDP by 2050.

15 October 2012 The Times Page 2 Sapa Tourists flock to SA despite downturn Tourist arrivals in South Africa grew by 10.5% in the first six months of this year, Tourism Minister Marthinus van Schalkwyk said yesterday. "Despite the global economic downturn, our focused marketing efforts and the hard work of everyone in the tourism industry are paying dividends," he said. Though the UN World Tourism Organisation predicted a decrease in global arrivals in the second half of this year, Van Schalkwyk was delighted with a very strong start to 2012 and was confident that this would be a good year for the industry. "We are very encouraged to see that our carefully formulated tourism growth strategy is yielding the desired results, with excellent growth achieved in the markets in which we are actively marketing destination South Africa, and good returns being realised in markets that we have identified as having strong tourism potential for our country." According to Statistics SA, South Africa attracted more than 4.4million tourists in the first half of this year compared with 3.9 million arrivals during the corresponding period last year.

The tourism industry experienced particularly strong growth in overseas tourist arrivals, recording a 17.1% growth in arrivals from outside the continent. A total of 1163477 overseas tourist arrivals was recorded in the first six months of 2012, compared with 993 364 in the corresponding period the previous year. Tourist arrivals from Asia grew by 40.7% and from Central America and South America by 54.4%. Van Schalkwyk said the launch of SA Airways' direct flight between Johannesburg and Beijing had contributed to the growth . More than 60 272 Chinese tourists visited South Africa in the first half of 2012, an increase of 68.4% . South Africa was also benefiting from the department's marketing and trade-relations work in other emerging markets. There was a 21.1% growth in arrivals from India in the first half of the year, and a 68.4% increase in arrivals from Brazil.