Connect to share and comment

First post-apartheid recession

Although strict banking regulations helped the country sidestep the worst, flagging global demand decimates mining and manufacturing. Doctors, bus drivers and metal workers strike. Zuma’s cabinet weathers its first scandal, while the new president establishes an accountability hotline for citizens, and his daughter holds $50,000 birthday party. Offshore, shark attack deaths are linked to ritual animal slaughtering.

Top News: South Africa has officially entered into its first recession in 17 years. Africa’s largest economy had sidestepped most of the financial crisis last fall thanks to its strict banking regulation, but the global economic slowdown has hit South Africa hard as demand for its minerals and manufactured products has plummeted. After declining 1.8 percent during the fourth quarter of 2008, the country’s gross domestic product sunk 6.4 percent during the first quarter. Manufacturing fell 22.1 percent, and mining fell 32.8 percent. Treasury Director-General Lesetja Kganyago said zero growth was all South Africa could hope for in 2009.

 

The economic gloom puts the new government of President Jacob Zuma in a tough spot. Zuma’s African National Congress promised in the recent elections to cut poverty and unemployment by half over the next five years. Good luck with that. Zuma is set to deliver his state of the union address this week.

 

Further adding to the government’s challenges are strikes or threats of strikes by several sectors of the economy. Doctors, bus drivers and metal workers have all marched recently for better working conditions. The Congress of South African Trade Unions (Cosatu), which fervently supported Zuma’s campaign, has warned that it could be at odds with the government and launch a massive strike over public-sector pay.

 

New Transport Minister S’bu Ndebele sparked outrage when he accepted gifts from contractors, including cattle and a brand-new Mercedes. Zuma, who got in trouble for accepting gifts from a businessman in the past, said Ndebele could keep the gifts, but Ndebele eventually agreed to give them back.

 

Zuma’s promise to increase accountability is set to materialize after the president announces a presidential hotline that South Africans can use to denounce inadequate delivery of public services.

 

Young Soweto mothers found themselves without milk formula after authorities failed to pay manufacturer Nestle. The infant milk formula is critical for HIV-positive mothers who can’t breastfeed for fear of transmitting the virus to their babies.

 

Eight teenagers died from apparent excessive bleeding during circumcision procedures at an initiation school near Pretoria. The police and the government are investigating the circumstances of the incident.

 

The Indian Premier League, a cricket tournament staged over six weeks in South Africa, was a resounding success for the most part, but the stadium for the final appeared dangerously overcrowded. Whether due to fake tickets or bribed security guards, the overcrowding is sure to ring an alarm bell for the organizers of next year’s soccer World Cup.

 

Mandla Mandela, grandson of former President Nelson Mandela, allegedly secured TV rights for his (still alive) grandfather’s funeral for about $380,000. The older Mandela is 90 years old and has looked worryingly frail in recent public appearances. The younger Mandela denies the accusations.

 

The South African Broadcast Corporation came under fierce criticism – again – for canning a political satire show for the second time. A version of cartoonist Zapiro’s puppet show was then shown on the Web site of newspaper Mail & Guardian, drawing praise from viewers and ire from the SABC, which is threatening legal action.

 

Money: Following the announcement of South Africa’s first recession since 1992, the Reserve Bank cut the basic lending rate by another 100 basis points to 7.5 percent. Cosatu, the union federation, criticized the move, saying a larger rate cut was necessary. Inflation remains high at 8.4 percent however, and Reserve Bank Governor Tito Mboweni hinted that this may be the last rate cut for a while.

 

Meanwhile, the success of the offering of $1.5 billion in 10-year dollar-denominated bonds by the South African government shows the country remains an attractive investment destination.

 

In other positive news, value retailer Mr. Price showed that it was possible to be profitable despite a challenging economic environment. The company reported increased market share and said earnings per share rose 16 percent in the year ended in March.

 

Cell phone operators MTN of South Africa and Bharti of India have resumed merger negotiations after first approaching each other last year. The possible deal was received with skepticism by investors of both companies. One day after a successful listing on the Johannesburg Stock Exchange, Vodacom reported a 21 percent drop in headline earnings in the year to March.

 

Elsewhere: Recession? What recession? Zuma’s daughter Duduzile, threw a $50,000 party for her 27th birthday.

 

The deaths of a lifeguard and a teenager in shark attacks earlier this year have been blamed on ritual animal slaughtering on an Indian Ocean beach. A government report recommended that such rituals take place away from beaches used by swimmers and surfers.

 

Zuma continued his campaign to woo Afrikaners by donning a jersey of Pretoria’s Blue Bulls rugby team ahead of their Super 14 final against New Zealand-based Chiefs. The gesture was reminiscent of Mandela wearing a springbok jersey during the 1995 World Cup final against New Zealand, and was followed by similar success as the Bulls thrashed the Chiefs 61-17.

 

http://www.globalpost.com/passport/south-africa/090601/519-61-%E2%80%94-first-post-apartheid-recession