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The story about Zuma, uncertainty and the rand

The rand is falling and it is quite understandable why. Since last weekend it is clear that SA's new president will most likely be Jacob Zuma, the guy who told the court he thought one could protect oneself against Aids by taking a shower after you've had sex. But, his ideas on Aids are not why the rand is falling.

The rand is falling partly because the world financial markets are nervous and have been positioning themselves for a downward move for a while now. (Because of the huge amounts invested in the JSE by foreign portfolio managers, the rand is now extremely vulnerable to international market movements and will take a big dip when (if) these markets lose their footing.)

But, I believe there is also a lot of Zuma in the recent decline of the rand from R9,70 to the Euro to the current R10,38 to the Euro level. For the simple reason that no-one has a clue about the kind of economic policies this guy will go for when he's the boss.

In fact, never in the short history of the new SA has there been such a gap in knowledge about the government's thinking on economic policy than now.

Of course, I don't read everything published in SA, but as far as I can make out, the mainstream media also don't ask these questions. Why they don't, I don't know. All the international markets get from SA is...silence.

And, of course, the constant stream of reports on crime. Such as the murder of the Austrian soccer player last weekend - on the same weekend the eyes of the world were fixed on SA, because of the draw for the 2010 World Cup preliminaries.

Murders are nothing special in SA. But, murders are not all alike. Some come and go, others have the power to cause a hellavalot of damage to country and economy. This murder made the headlines in the German press last Sunday - ahead of the news which countries Germany will face in the play-offs. The TV report (main story on prime-time national news) of the crime situation in SA, sent a very negative message to Germans. As murders go, this was a very "unfortunate one" for SA.

This could also have played a role in the rand's drop on the first two days of trade since then, but the main reason (in my estimation) still is the Zuma factor. More specifically, the uncertainty factor....the fact that no-one knows what Zuma's views about the economy are. And what role Cosatu will play in future economic policy.

To me it feels like we're back in 1996, in the months before the government under Mandela published the GEAR policy document, which spellt the government's economic policy out. Then uncertainty was also the big word. Until the GEAR document came. Which infuriated Cosatu, but brought certainty and calm to the markets.

But, this time around it's just a little scarier than in 1996. Then there was still Mandela. Now there is just the little man Zuma. And the outlook that Cosatu might be the big policymaker of the future.

It's always a stupid thing to forecast exchange rates. But, I'm going to do it anyway. And say: The rand has a good chance of dropping through R12 to the Euro in the days after Zuma's election. Where will it stabilize? The new level going forward will probably be between R11 and R12. Stronger than R11 against the Euro it's not likely to go again.

The SA media could help avoid a depreciation of this proportions by writing about Zuma's economic ideas, how economic policies might change after Mbeki, what Cosatu wants and what the future role of trade unions might be in the Zuma era.

Let's hold thumbs for articles of that kind....and (probably more important) let's pray that Trevor Manuel doesn't decide soon to pack it in. Because then the rand will be in real shit.

And then there's the story of the frail Mandela....and the rand.

But, let's rather not go there.
28.11.07 10:20


South Africans are from Venus and Germans are from....

First the article shocked me, then I was disappointed, then I was a bit angry and then I smiled...because it suddenly struck me (again) how far away Germany (and the whole Europe) is from Nelspruit (and the whole South Africa).

In Germany the government hands out fists full of Euros and bends over backwards to get German women to have babies - mostly without success. The German fertility rate is the second lowest in Europe (after Italy) and not high enough to maintain the population at current levels into the future. In SA 20 Euros (R200) a month is enough to make a baby. And then they come by the hundreds, if not thousands.

Read on....if you have time to go on an emotional roller-coaster ride.

Article published on News24 on 27/11/2007 14:32

Pregnant teens 'think it's fun'

by Thabisile Khoza

Nelspruit - In the past 10 months, more than 1 000 schoolgirls fell pregnant in and around Nelspruit.

According to statistics gathered in Mpumalanga's Ehlanzeni district, 994 girls at 110 high schools fell pregnant from January to October, while 58 girls from 31 primary schools also fell pregnant in that period.

The highest number of teen pregnancies are in the Mgwenya education circuit, which includes KaNyamazane township outside Nelspruit, where 168 girls at 10 high schools are pregnant.

In the White River circuit, 147 girls at eight high schools and four girls at three primary schools are pregnant.

Mostly orphans

The Nkomazi West Circuit south of Malalane has 111 pregnant girls at eight high schools and 26 pregnant girls at seven primary schools.

A 16-year-old orphan who is in Grade 11 at Inkomazi high school said she fell pregnant so she could apply for a government child support grant.

"I fell pregnant because I needed the money. The money can help me get clothes and food," she said.

The girl, who asked not to be named, lives with her 11-year-old sister and said there was no other household income for them.

"Most of the teenage mothers at our school are orphans and deliberately fell pregnant to get the R200 grant. They believe they are going to use this money, but it's too little," said the girl.

Guidance teacher at the school, Zoliswa Makweyane, said the problem was so big, that class tests were not scheduled on days when social grants were paid out.

"We can't do anything on those days because they all go out to collect their money at the banks or at pension pay points and only return to school the following day," she said.

Schools with the highest rate of teen pregnancies are Jacob Mdluli high school in Pienaar where 48 girls are pregnant, followed by Inkomazi high school where 46 girls are pregnant, Mayibuye high school in Daantjie where 33 girls are pregnant, Skhwahlane primary school in Ntunda outside Malalane where 30 girls are pregnant and Khumbula high school in White River where 29 girls are pregnant.

"These are very shocking statistics. We introduced awareness programmes in March to try encourage school pupils to try abstain from sex, or at least practice safe sex," said the regional director for the education department's Ehlanzeni region, Mfana Lushaba.

end of article

I'll write more once I've captured my breath......
28.11.07 13:38

Why I'm so negative on the rand

This interview was published on the respected Moneyweb website this morning. Read it to get a feeling for the "choppy times" awaiting South Africa, its economy and its currency.

Coming chaos?
The worst case scenario for the South African presidency

Felicity Duncan
29 Nov 2007 12:53

Imagine the following bleak scenario: Jacob Zuma wins the ANC leadership race, and is then successfully prosecuted for corruption. He is unable to take up the presidency in 2009, creating a leadership vacuum and embarrassing the country no end.

This is a possible nightmare scenario sketched by author and former ANC MP Andrew Feinstein.

Speaking to the Moneyweb Power Hour, Feinstein said: "If Jacob Zuma was to win the ANC presidency at Polokwane, he wouldn't be the country's president for a while, and the corruption charges hanging over him, his having lost two appeals, means that I assume he is going to be charged at some point in the new year. So you could have a situation where he has defeated Thabo Mbeki, where he is the ANC president, where he then faces corruption charges."

And the charges may be pretty solid.

"If one looks at the Schabir Shaik trial and the fact that the prosecutors in that trial wanted to charge both Zuma and Schaik together, because a number of the offences were allegedly committed together one would assume that there must be some possibility of his actually being convicted. So the scenario that we could have is one of Jacob Zuma becoming ANC president, of standing trial during the course of next year, and obviously, if he is found guilty in that trial he is not going to be able to stand for the country's presidency in April 2009."

Zuma certainly looks like the best horse in the ANC's leadership race right now. The Women's League went for him, businessman and potential rival Tokyo Sexwale has endorsed him, Cosatu and the Youth League seem firmly behind him. He has successfully presented himself as the most poor-friendly choice, and his status with the more leftist parts of the ANC (including Cosatu and the Communist Party) is solid.

He looks pretty unbeatable. So let's assume he is the ANC's choice next month. This brings us to the dark possibility of Zuma facing successful prosecution on corruption charges while head of the ANC. People convicted on criminal charges cannot be members of parliament, so a convicted Zuma could not assume the presidency. That would be pretty awkward for the country, and certainly would not do too much for our international standing.

However, the alternative - that Zuma is not be prosecuted for corruption because he is the ANC president - would be even worse.

"I would hope very strongly that if he were to win the presidency of the ANC that would in no way affect whether he is charged with the fraud and corruption offences by the National Prosecuting Authority if they believe they have significant evidence against him. And clearly after he lost his two appeals against them being able to use evidence that they collected in search and seizure raids on his house and offices, and also being able to access the original copy of the so-called encrypted fax that was sent from Thomsons to Schabir Shaik about the R500 000 that Zuma was allegedly promised to stop Thomsons being investigated. If they have that evidence, I would be very worried indeed for the state of South African governance if Zuma's accession to the ANC presidency were to stop those charges being led in court."

Already, Cosatu has threatened to take to the streets in strike protests if the NPA bring corruption charges against Zuma. Obviously, this would seriously undermine the process of justice in South Africa. If there is evidence enough to convict Zuma he should be prosecuted.

Corruption scandals have been plentiful in the last few years. Corruption monitoring site Global Integrity provides a "corruption timeline" of events in recent South African history. Most notable among them is the ongoing arms scandal.

The arms deal and its implications have become something of a cancer in the ANC. Feinstein, a former ANC MP, resigned in 2001 in protest against the cover-up of the arms scandal. He believes that the arms deal, in which billions of rands in kickbacks allegedly went to the ANC and several individuals, was the beginning of a bad period for the organisation.

"What has happened is that the arms deal was the point at which things started to go wrong within the ANC, at which people started to feel that it was OK to do deals in this way. And, you know, we saw a whole lot of things subsequent to that."

"We saw the whole oilgate saga. We saw all sorts of question marks around Cell C, we've seen all of the Selebi stuff recently, we've seen various people in government involved in all sorts of business deals in which there seems to be a fairly obvious conflict of interest."

However, Feinstein believes that this leadership race offers a golden opportunity.

"I think we're reaching a point at which people in the ANC, unconnected to both Zuma and Mbeki, need to stand up and say, "Enough is enough, and we need to clean up our act because otherwise the consequences for the country are extremely damaging.""

"And that's why I think that if the outcome of what's going on at the moment was that that both Mbeki and Zuma found themselves to be "politically undesirable", that would ultimately be in the best interest of the ANC and South Africa, because I believe we will only move beyond the very tawdry and unsavoury few years that we've gone through once those two main protagonists are actually removed from the political scene, and once we have some new blood leading the ANC."

"And until such time as that happens I think, one, things are going to be quite volatile and uncertain. And, two, there are going to be all of these suspicions."

End of story
29.11.07 12:45


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