South Africa

EM rate hikes aren’t enough to scare FX traders

29 Jan 2014

Turkey’s hefty rate rise gave the lira only fleeting respite. Traders scoffed at a smaller South African rate hike. Euro zone bond vigilantes folded at the ECB’s commitment to preserve the euro. But FX traders look set to test central banks’ capacity to defend EM currencies.

Western debt magic is poison for Africa

24 Dec 2013

A poor continent with limited savings is hugely vulnerable to a credit crunch. Africa desperately needs capital, but only the sort that can’t easily leave. Speculative investors and yield-hunters will eventually do more harm than good. There’s a caution here for Bob Diamond.

Mandela’s successors can shape his economic legacy

10 Dec 2013

As world leaders remember a great statesman, they may ponder South Africa’s middle-income trap. Compared with other post-colonial economies, even stagnation would be a tribute to Mandela’s peace-making. It’s up to those who followed him to buck recent trends and escape the trap.

South Africa looks like grim shadow-BRIC

29 Aug 2013

The country is sometimes listed as a near member of the group of developing world giants. Alas, it comes close in the wrong direction: Russia’s one-party rule, Brazil’s corruption, China’s spiraling labor costs and India’s inefficiency. It desperately needs a better growth model.

S. African miners have few options in wage talks

11 Jul 2013

In a healthy industry, prices of goods should support the cost of decent wages. In South Africa’s mines, a toxic mix of deprivation, politics and geology creates underinvestment and angry workers. With the prices of key metals falling, it’s hard to see the dynamic changing.

South African economy bogged down in old politics

30 May 2013

Real GDP didn’t even manage a 1 pct growth rate in Q1. That pales next to star economies like Ghana’s. Mining rebounded but manufacturing fell. While emerging near-neighbors are welcoming foreign investment and small business, South Africa’s leaders are reliving past battles.

BRICS inch towards alternative to dollar bloc

27 Mar 2013

Brazil and China will use their own currencies for trade and the five nations are still working on creating a rival to the World Bank. With nearly half the world’s population and 15 pct of its trade - and despite flawed policies - the group is a useful counterweight.

Anglo opts for high-risk, high-reward in platinum

15 Jan 2013

The embattled miner deserves credit. Its long-awaited platinum restructuring was more aggressive than expected. The task for the incoming CEO is to execute without more of the labour unrest that hit output in 2012. The shares’ subdued response suggests investors are rightly wary.

New Anglo boss needs free hand to make changes

8 Jan 2013

Mark Cutifani’s operational nous and South African experience make him a good choice to run Anglo American. But the miner’s incoming boss should set his own agenda, including examining a breakup. Anglo’s institutional inertia already threatens to undermine his authority.

Whole of sub-Saharan Africa is the real quasi-BRIC

14 Dec 2012

South Africa alone can’t match the others in the emerging club. But add non-Arab continental neighbors, and the combined GDP is over $1 trln and growing fast. Single countries are too small for most investors. But if the region can combine markets and trade, it could take off.

Lonmin doesn’t have to surrender to Xstrata – yet

9 Nov 2012

The big platinum miner spurned 25 pct owner Xstrata’s demand for management change in return for backing its $817 mln rights issue. It can afford to, for now: the fundraising is underwritten and Xstrata is probably loath to be diluted. But after this battle, Lonmin faces a war.

South Africa risks being overtaken by region

18 Oct 2012

Zambia’s recent Eurobond success highlights how cellphones, the Web and cheap money are allowing Africa to leverage its resources and labor more effectively. But growth needs decent governance and civil peace too. Higher-cost South Africa looks shaky on both counts.

No easy fix for South Africa platinum crisis

4 Oct 2012

Striking miners want higher pay for dangerous work. But current prices are too low for the industry to pay up. Cutting production would help, but platinum mines are deep and expensive to shut. Firing workers is political dynamite. So the crisis drags on.

South Africa platinum crisis not over yet

19 Sep 2012

A deal between Lonmin and its striking miners might solve an immediate problem, if it holds. But it sets up other big challenges for the company and the industry. A big wage hike will hurt already weak margins. And the response may only encourage further strikes.

Escalating platinum strife needs political fix

12 Sep 2012

Spreading labour unrest has forced Anglo American to halt platinum production at big mines in South Africa. Angry unions’ wage demands cannot be met without cutting jobs or closing duff digs. But that’ll inflame tensions. Miners need government help to break the impasse.

South African mine unrest reflects stuck economy

24 Aug 2012

The poor have gained little in 18 years of democracy. The gulf with the rich is huge, growth isn’t what it could be, and newly wealthy leaders are complacent. It’s no surprise that as, say, in pre-1917 Russia, militant opposition is rising. The ruling ANC has its work cut out.

Lonmin needs to go big, or go away

23 Aug 2012

The platinum miner was stretched, financially and operationally, before last week’s deadly violence. Investment, perhaps funded by a big rights issue, is needed. It could improve conditions for workers, reduce costs, and secure a future for the company that, at present, is bleak.

S.Africa mining bloodshed has global implications

17 Aug 2012

The deadly union turf war at a Lonmin platinum mine is a sovereign challenge and a global concern. South Africa has most of the world’s platinum, an essential industrial metal. It’s up to the government to restore order. The mining groups are stuck and have no easy options.

New bank plan risks dilution of emerging influence

30 Mar 2012

The BRICS are mulling the creation of an institution with aims similar to the World Bank. But an Emerging World Bank may diffuse the effort, capital, and talent dedicated to global economic development. BRICS may also struggle to secure their rightful influence over the original.