Policymakers not sure whether to jump or duck
September 23, 2009
In South Africa, where the economy may still be contracting and inflation is over 6 percent, it is difficult for policy makers to strike the right note. Like Alice, who could never be sure whether her next move would cause her head to hit the ceiling or her feet, they are uncertain of what to do next. Too many interest rate cuts and inflation may rise again; too few and the economy may shrivel.
News yesterday from Asia shows those economies are in much better shape. According to a Bloomberg report, the Asian Development Bank (ADB) is forecasting that Asia, excluding Japan, will grow 3.9 percent this year, faster than a March estimate of 3.4 percent. And growth may strengthen next year to 6.4 percent.
China leads the way; it is expected to grow 8.2 percent this year, compared with a previous forecast of 7 percent. And India will grow at 6 percent, 1 percentage point more than expected.
Not only does Asia have a favourable growth forecast, but its inflationary expectations are benign.
The ADB expects inflation to average 1.5 percent this year, compared with a March forecast of 2.4 percent, before accelerating to 3.4 percent next year as growth strengthens. If we subtract inflation from growth as a measure of an economy's resilience, Asia comes out at 2.4 percent.
If we assume the local economy has stopped contracting and is registering no growth, the same sum produces a measure of minus 6.4 percent.
What South Africa has got horribly wrong is Eskom's poor planning. So it is strange, when the power parastatal is the source of such misery, that Cosatu and others see the nationalisation of private firms as a remedy for market problems.
Caught offside
Local retailer Woolworths scored an embarrassing own goal yesterday when it mistakenly took itself for the Australian retailer of the same name, which made it onto the Global 500 carbon disclosure leadership index for 2009.
The Cape Town-based company issued a statement that it had been commended for its approach to climate change disclosure, claiming membership of this year's index by the Carbon Disclosure Project (CDP), announced on Monday.
The error was not entirely Woolworths' fault - it had received notification to this effect from the CDP. Upon discovering the mistake yesterday, Woolworths asked the CDP for a formal apology.
Nevertheless, our local Woolies should have realised its market capitalisation is just too small to be the Woolworths referred to in this week's CDP Global 500 report. And then there are its actual emissions - significantly lower than those disclosed by the Australian retailer of 3.1 million tons of carbon dioxide equivalent.
Last year, South Africa's Woolworths reported emissions of 320 883 tons.
Chances are that our Woolies will indeed make it onto the South African version of the leadership index when it is announced later this year. The Australian Woolworths, along with Wal-Mart Stores and Reckitt Benckiser, were the only three Global 500 companies in the consumer staples sector that made it onto the carbon disclosure leadership index.
Local firms that really did get a mention in the report were Anglo Platinum (Angloplat) and Sasol, which were among the five highest-scoring companies based in non-annex 1 states, or developing nations.
But Angloplat didn't come out looking all rosy. The report contrasted differing company outlooks within sectors and juxtaposed the approach of Newmont Mining with that of Angloplat towards factoring the cost of future emissions into capital costs and investments.
Newmont has developed a financial risk model that calculates the cost of emissions for all operations and project pipelines for 20 years into the future such that "estimated emissions costs become part of our life of mine plans". Angloplat doesn't do so, although it is likely to become a factor in future decisions.
Hanging dirt in public
Cope MP Julie Killian perhaps captured the moment when she described the auditor-general's report into the irregularities and dirt at the SABC as "die ore van die seekoei" (the ears of the hippo in Afrikaans), quickly noting that the English equivalent was "tip of the iceberg".
Terence Nombembe, the auditor-general, once again landed a bombshell before a parliamentary committee, saying the tone at the top of the SABC appeared to have created "a culture where management is not focused on public accountability or acting in the best interest of the SABC".
He reported that evidence could not be found that seven tenders awarded for a total of R174 million were approved with appropriate authority. The former chief executive and former head of legal and business advisory services entered into a material agreement for R326m, allegedly without authority to do so.
During Nombembe's probe it was found that 1 465 employees were identified as having interests in firms or close corporations. "There was no central register of approval granted to the employees, which is an example of inadequate management of information."
However, of those employees, 20 were directors or members of 20 companies or close corporations that had received payments from the public broadcaster to the tune of about R3.4m.
He found that excessive petrol card expenditure was incurred by some employees at top and senior management levels. The policy governing petrol card usage did not place a limit on the usage of cards. Between January 2007 and July this year, card payments cost R11.3m.
Meanwhile 26 staff members were sent to the Beijing Olympics at a cost of R6m, apparently without board approval. One lives in hope that interim board member Leslie Sedibe is right when he told MPs yesterday: "The party is over." page 22
Edited by Peter DeIonno. With contributions by Ethel Hazelhurst, Ingi Salgado and Donwald Pressly
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