Cluster realignment beats Machiavelli at his game
October 20, 2009
The presidency has announced a reconfiguration of ministerial clusters it claims will improve co-ordination in the government and enhance service delivery.
According to cabinet spokesman Themba Maseko, "the main functions of the clusters were to ensure alignment of government-wide priorities, facilitate and monitor the implementation of priority programmes and provide a consultative platform on cross-cutting priorities and matters being taken to cabinet".
However, it may just be a convenient way of ensuring that conflicts do not arise between perceived supporters of former president Thabo Mbeki such as National Planning Minister Trevor Manuel - and the new era people in cabinet, including former trade unionist and now Economic Development Minister Ebrahim Patel.
The previous economics cluster has been split up, with some ministries falling under more than one cluster. For example, the infrastructure development cluster will be chaired by Transport Minister Sbu Ndebele with Public Enterprises Minister Barbara Hogan as his deputy. Both are Mbeki-ites. Included in the cluster are Manuel, Patel and Finance Minister Pravin Gordhan. One would have thought one of the three could have chaired the committee, but President Jacob Zuma may want a mediator in the form of Ndebele.
Patel will also fall into the "economic sectors and employment" cluster - to be chaired by new era Rural Development and Land Reform Minister Gugile Nkwinti - with Gordhan, but this time excluding Manuel. Notably neither likely chairmen, Gordhan and Patel, heads the cluster.
Manuel's absence is notable: does this indicate that the powers that be have determined that Manuel, who the unions detest, has nothing to contribute to conversations on employment matters? This is despite the fact that unemployment reduction should be at the centre of all government planning efforts, which is, after all, his job. If you thought the government was Machiavellian under Mbeki, you ain't seen nothing yet.
What's the fuss?
But perhaps all this fuss is not necessary after all. Those who thought that the rumoured "tussle" between Ebrahim Patel, the Minister for Economic Development, and Trevor Manuel, the Minister in the President's office, signalled a push to provide unlimited support for workers would have been more than a little surprised by the tone and content of Patel's speech to the annual general meeting of the national bargaining council for the clothing and textile sector last Thursday.
Patel made it very clear that the government had done all it could to help the clothing industry through its difficult times. He itemised the assistance provided, including a training layoff scheme, a R6 billion fund to assist companies in all sectors that are in distress as a result of the recession; and a major clampdown on illegal imports.
He referred to the Competitiveness Improvement Programme and the Manufacturing Investment Programme, which had made available about R500 million either as soft loans or grants to help modernise the clothing industry. There was also the increase in tariffs on clothes from 40 percent to 45 percent, which was within World Trade Organisation requirements.
Patel told his audience of trade unionists and employers that it was now their turn to weigh in and help to create a new growth strategy for the sector.
Hardly the sort of comments from someone who is suspected of wanting to nationalise all the pillars of the economy and of putting the interests of workers at the centre of government policy - at any cost.
The details of the agreement signed between trade unions and employers last week provided some insight into the hardship facing many employees in this sector. After tough negotiations and strikes, it seems that the best the non-metro workers in this industry could secure was an increase of R40 a week from September 1 and a further R5 a week from January 1, 2010.
Beer-fuelled bankers
Anyone who follows Business Report closely will of course know that this paper tipped SABMiller's acquisition of Mexico's Femsa years ago - we might even have said "it was just a matter of time".
Without in any way detracting from our keen foresight, it could be argued that such speculation didn't really require too much foresight.
As SABMiller's Graham Mackay told us all in 1998, shortly after he'd packed up and headed for the damp climes of the UK, for the foreseeable future the beer industry would be a story of consolidation.
For the past 10 years that is precisely what it has been all about. And although the list of potential acquirers becomes smaller with every deal done, it has not resulted in any reduction in price levels.
Far from it.
Femsa, apparently faced with considerable operating challenges, is expected to have a price tag of between $7 billion (R52bn) and $9bn. This compares with the $5bn SAB paid for Miller in 2002.
The consolidation process has been driven largely by economies of scale, immense in an industry that can pump out lakes of beer with just a handful of staff.
No doubt the process has been helped along by the corporate banking community, which presumably picks up wonderful fees every time one of these multibillion-dollar deals is consummated. And it is likely that the top executives of the acquiring firms are also enthusiastic about the process as it justifies ever-increasing pay packages.
Even while the Femsa deal remains in the realm of speculation, analysts have already turned to the next target - a possible tie-up between Heineken and Diageo's Guinness. And when there are only three enormous beer groups left standing in the world, will somebody step in and start chanting about the advantages of having local beer operators?
And then will the process of deconsolidation become fashionable and will it be enough to keep the corporate bankers happy for a few more years? page 3
Edited by Quentin Wray. With contributions from Donwald Pressly and Ann Crotty
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