Monday, July 25, 2011

Embraer: Africa the next big thing

Brazil's jet maker Embraer now has its sights set on Africa.

The company, which in the past couple of years focused mostly on Asian markets, plans to double the number of its jets operating on the African continent from the current 150, Reuters reported.

Mathieu Duquesnoy, Embraer's vice president, told reporters in Nairobi, where the company host an event earlier this week, the company is looking for opportunities in the region's fast-growing aviation industry.

"If you look at passenger demand, we see an average growth of 5.4 per cent (in Africa) one of the highest we predict around the world," Reuters quoted Duquesnoy as saying.

According to the report, Embraer wants to boost order books in the regional aircraft niche, which accounts for almost 40 per cent of the company's total customer base.

Duquesnoy said the company's 30-120 seaters are particularly suited to African airlines, but the greatest growth potential in the continent lies in the 90-120 seater market segment. He told Reuters Egyptair, Air Nigeria, Mozambique's LAM and Kenya Airways, already fly its planes.

The vice-president estimated that there will be 800 more airplanes in the next 20 years in Africa, of any type.

Source: FMTilt, Reuters

Friday, July 22, 2011

Despite high returns, investors slight SA

South Africa offers “stunning” returns to investors, according to Sandeep Mahajan, a World Bank economist. Yet the economy fails to attract enough investment to achieve the government’s 6.5 percent annual growth target.

Growth of that order is needed to create 5 million jobs in the next 10 years – the goal of the New Growth Path outlined by Economic Development Minister Ebrahim Patel.

Mahajan was speaking at the launch, in Johannesburg yesterday, of a World Bank economic update on the country, the first of a new, twice-yearly series. The second issue will be released in December.

The report says real returns for owners of “physical capital” – such as factories – have risen sharply since the early 1990s, to an average rate of 15 percent between 1994 and 2008. If inflation is included, returns are as high as 23 percent. Moreover, the rate of return accelerated over the period.

In the five years before the global recession – 2003 to 2008 – real rates of return picked up from 15 percent to 20 percent. If inflation is added, nominal returns were close to 30 percent. This rate of return puts South Africa in the same league as China, according to Mahajan.

But private investors had failed to respond, he said, because they also looked at risk and barriers to doing business.

The report identifies four key issues that deter investors: industrial competition in South Africa is much weaker than in its international peers; skills development; labour relations; and low savings rates.

Based on the experience of other countries, South Africa’s savings rate would have to be ratcheted up from its present level of about 16 percent of gross domestic product (GDP), and its investment rate from 19 percent, to 25 percent to reach the state’s growth target.

Marcelo Giugale, a World Bank director, said the outlook for most emerging markets was bright, as the engine of growth switched from the developed to the developing world. He forecast average growth of 6 percent a year over the next five years. “Even Africa will have growth of at least 5 percent.”

Giugale described the report as a contribution to help South Africa catch this “fast-moving train”. Present estimates are that South Africa will grow at 3.5 percent this year, 4.1 percent next year and 4.4 percent in 2013. The report says: “The long-term potential growth rate under the current policy environment is estimated at 3.5 percent.”

To catch up with the emerging market trend, South Africa would have to work for “more effective internal integration” of its own developed and informal economies and “smarter regional integration”.

It says a big push is needed on public transport infrastructure to address the problems created by “spatially separated townships and informal settlements where the bulk of the unemployedLink live”. It also advocates programmes to “enhance financial inclusion and improve the cognitive and technical skills of youth”.

Source: Business Report

FIONA FORDE: Scenarios

Walking together to a new SA is meant to look like this

Published: 2011/07/22 07:11:16 AM

WHEN Adam Kahane facilitated the Mont Fleur scenarios 20 years ago, someone trotted out a joke that lodged in his mind.

"In the face of our unbelievably complex challenges, there are two options available to us: a practical option and a miraculous option," the story went.

"The practical option would be for us to get down on our knees and pray that some miraculous person will intervene and do it for us. The miraculous option would be for us to argue and talk and work together and figure it out ourselves."

Those words echoed loud when he facilitated the Dinokeng Scenarios a couple of years ago, which got SA talking about where the country was headed and what the future held. The scenario planning started out in 2008 and Canadian-born Kahane was brought in to facilitate it. He was joined by a group of conveners and a team 30 or so people, drawn from different walks of life. Between them they crafted what has become known as the Dinokeng Scenarios .

It was against the backdrop of extraordinary political disquiet. The African National Congress had elected a new leadership in Polokwane who were opposed to the members of the party who were running the country and it wasn’t clear whose hands were on the steering wheel.

In hindsight, Kahane feels the timing was perfect because it is during periods of uncertainty "that scenarios should be carried out, when you can’t see the road ahead, it’s foggy. And you want to pause and think about what’s going on and what our choices are."

But just as the Dinokeng team was about to hold their first three-day workshop in September 2008, the fog became thicker. Jacob Zuma had become the subject of a high-profile case of corruption and days after that first workshop, Judge Chris Nicholson invalidated the charges and implicated then president Thabo Mbeki in what he believed was political interference in the saga.

By the time the team gathered for their second session in October, Mbeki had been ousted; and by the time the third took place in November, the formation of the Congress of the People (COPE) was under way.

"We had the feeling every time we met we were in a completely different situation," says Kahane. "And it was really difficult to articulate what was happening", which made equally difficult the task of interpreting the period from 1994 to that point and particularly contentious the challenge of casting their minds into the future.

"The biggest disagreement was over the question of how bad things were. Was the tone, ‘We’re doing OK, we have to keep doing OK’? Or was the tone, ‘We’ve made mistakes. There are real problems and we have to deal with them or things will go downhill’?"

It was only after much debate that the second interpretation prevailed and the team recognised they were storing up trouble if they did not address the problems. And from there, the three scenarios eventually emerged which they put words on during their final workshop in February 2009: "Walk together", "walk apart" or "walk behind".

"Walk apart" imagined an unhealthy world by 2020 where everyone was looking out for themselves or their people in the face of such problems, be it their family, their organisation or their faction, depending on how they defined people.

"Walk behind" depicted an interventionist state that would try to manage challenges on behalf of all who lived in the country.

"Walk together" captured a country where the various actors — the government included — worked in concert towards a better future.

Not surprisingly, the team took the view that the ideal scenario was "walk together". In "walk behind" they felt the state didn’t have the capacity to be any more interventionist than it was , while "walk apart" imagined a situation that went from bad to worse.

The scenarios started a conversation that kept the country talking for the rest of 2009. They tapped into extraordinary goodwill and an undeniable sense that South Africans wanted to make this country work. But they died a sudden death at the end of that year and little has been heard of them since.

Yet two years on they are as relevant, if not more so, than they were then. And Kahane believes, perhaps surprisingly, that SA is already falling into the ideal third scenario — walk together.

"Let’s not forget ‘walk together’ is the high-conflict scenario," he says. "By definition this is the scenario with lots of voices, lots of actors, therefore lots of contestation, lots of protest marches, lots of arguments in the press, lots of court cases, lots of yelling and screaming. And if you don’t realise that you will be alarmed at the conflict. But if you understand that ‘walk together’ necessarily implies a high level of conflict, then you will interpret that conflict in a different way."

Hence SA in 2011 is a place "not of ill health, but of health. That’s what walk together looks like."

Yet there is a definite tug in certain quarters to lure the country into a situation where we would end up "walking behind" our leaders. Since the scenarios were launched there has been a sense that the democratic space is diminishing, not expanding, a point magnified by the continuing debate around nationalisation, for example. And that’s where it is important to reflect again on what the scenarios highlighted.

"The argument the team made is that the South African state does not and cannot have the competency to play that role. It is a state that wasn’t designed to serve the population as a whole and because of that, today it is struggling to accomplish even its current tasks," he argues.

"So having the state take on more functions raises understandable concerns. We have a complex economy and a poorly functioning state. And if the municipalities can’t deliver and the state is doing a mediocre job of managing parastatals, how pragmatic would it be to take over the function of the private sector by nationalising the mines or any other sector?"

The debate today is nationalisation. Tomorrow it may be something else. But the message two years ago from Dinokeng was that it was not a good idea to leave the future of SA up to the government.

So why are we feeling that tug today?

"My sense is that the situation is particularly fluid. We are going through another transition."

Is it time to plan another set of scenarios? "No. The Dinokeng Scenarios are still a perfect fit."

I want to ask him why we don’t hear more about the scenarios today, but then I’m reminded of the practical versus the miraculous option. Two years ago, we were all talking coherently about the scenarios. They provided something of a compass, a practical guide. But today we are living through the scenarios in what often feels like an incoherent way.

Perhaps Kahane is right. Perhaps we are walking together. And as he would say, that’s miraculous.

But maybe the practical gave way to the miraculous too soon. Maybe a little more of the practical — more guidance on how to frame these pressing conversations — would make us miraculously more able to inhabit this miraculous state.

• Forde is a freelance writer.

Thursday, July 14, 2011

PWC: African governments becoming more accommodating

Nairobi - A survey of chief executives in 10 African countries has found that businesses in Africa enjoy more freedom and governments are more attentive to the private sector than in previous years.

The survey, released on Thursday by PricewaterhouseCoopers (PwC), included 201 business leaders from a broad cross-section of industries from both local and expatriate businesses.

Philip Kinisu, a top official with PwC in Kenya, said that the private sectors in Kenya, South Africa, Nigeria and Rwanda are actively participating with governments on strategic planning.

The survey found that chief executives are generally optimistic about economic growth in Africa; more than 60% expect their business to grow in the next 12 months.

Source: Fin24

Wednesday, July 13, 2011

Clamp down on cadres in municipalities

In addition to prohibiting senior party office bearers from holding top municipal jobs, the new legislation aims to ensure that municipalities are managed by skilled people
Published: 2011/07/13 06:28:52 AM

CAPE TOWN — Political parties may no longer deploy cadres into top municipal positions now that the Municipal Systems Bill has been signed into law by President Jacob Zuma .

In addition to prohibiting senior party office bearers from holding top municipal jobs, the new legislation aims to ensure that municipalities are managed by skilled people. The act also stipulates that any municipal official found guilty of fraud and corruption may not be hired for 10 years after conviction.

These new requirements follow a recent finding by Public Protector Thuli Madonsela that Hessequa mayor Christopher Taute had abused his power by soliciting funds from businesses for the African National Congress’ s (ANC’s) May municipal election campaign.

Mr Zuma, who signed the bill at the weekend, faced pressure from the South African Municipal Workers Union (Samwu) not to sign the bill after Parliament passed it in April.

Samwu had raised concern about several clauses in the bill, particularly the one prohibiting senior party members from holding top municipal jobs. The union said this would limit individuals’ right of association.

The 115000-strong union threatened to withdraw its support for the ANC in the May election in protest against the bill.

Samwu general secretary Mthandeki Nhlapo said yesterday the union would not comment.

"We have decided not to issue any comment on this matter until after our special central executive committee meeting on Thursday when we will discuss this issue," Mr Nhlapo said.

There are indications the union will embark on a strike in the next few weeks to show its dissatisfaction with the new law.

The South African Local Government Association ’s spokeswoman, Melissa Kentane, said yesterday the association would ensure that all councillors and municipal officials were aware of the act and its implications on municipal operations.

"Guidelines will be circulated and, if requested, legal opinions will be provided," Ms Kentane said. She said the prescribed municipal skills and competencies had not yet been published for consultation .

Last month the auditor-general complained that up to 80% of municipalities used consultants to assist with their year-end financial statements, and only seven municipalities achieved unqualified audits .

The director of the University of Western Cape Community Law Centre, Prof Nico Steytler said yesterday that even though Samwu contested the legislation, it was still justifiable. "The ANC leadership was clear on it and this was a well thought out bill which will help in the provision of proper and impartial service delivery," Prof Steytler said.

The Independent Democrats (ID) Parliamentary leader, Joe Mcgluwa, said Mr Zuma may have failed to uphold his constitutional obligations by delaying signing the bill.

"The ID hopes the signing of the bill marks the first step in a concerted effort by the ANC to bring this disastrous policy of cadre deployment to an end," Mr Mcgluwa said.

He said the fact that the bill was signed so long after it was approved by Parliament on April 19 was cause for concern.

"Section 237 of the constitution clearly states that all ‘constitutional obligations must be performed diligently and without delay’. Link

"The delay in the president’s signing of the bill means that its provisions will have had no effect on key municipal appointments made between April 19 and July 2."

Source: Business Day

Tuesday, July 12, 2011

South Africa's true unemployment rate: 8% (Adcorp)

Employment agency Adcorp has drawn the ire of the statistician-general and economists for saying that the country’s unemployment rate is closer to 8 percent than the official 25 percent, if informal employment is accounted for.

However, one economist sprang to Adcorp’s defence yesterday, saying the official employment data were unreliable.

In the Adcorp employment index for June, the firm’s labour market analyst, Loane Sharpe, said it was worth noting that the country’s unemployment rate was one of the highest globally. In 2010 there were 8.5 million unemployed and under-employed people.

The report states that this does not mean that millions of South Africans are destitute and starving.

Adcorp’s research shows that informal sector employment – employment that does not necessarily involve a formal employment contract or membership of a pension fund or medical aid – is substantially underestimated.

“If we fully account for informal employment, South Africa’s unemployment rate is closer to 8 percent than 25 percent. This suggests that many millions of enterprising South Africans have been labelled as ‘unemployed’ incorrectly. This, too, is an inconvenient fact: many millions of enterprising South Africans make a living on a daily basis and neither pay taxes nor adhere to labour laws,” the report states.

Employment surveys are done and released quarterly by Statistics SA, a government agency.

The official survey released in May showed that the rate of unemployment was 24 percent in the first quarter of 2011.

The head of Stats SA, Pali Lehohla, who is the country’s statistician-general, said Adcorp’s unemployment claims were “spurious and barren on methodology and science of design, collection, processing and dissemination of labour market statistics”.

He said the figures “represent nothing but metaphorical hallucinations of an intoxicated institution that uses the lamp post for support rather than shedding light. Public statistics should shed light rather than be used to support preconceived positions.”

Rudi Dicks, the director of the National Labour and Economic Development Institute, was equally dismissive of Adcorp’s figures. He said that if faith was put in very unreliable data sources such as those produced by Adcorp, then this would indicate a clear misrepresentation of facts and reliable data sources produced by official data sources.

“Secondly, how do we argue that many people who have no choice in engaging in informal economic activity, such as parking guards or fruit and vegetable sellers, for example, are employed? This form of economic activity is so marginal that it hardly can be considered subsistence, let alone employment,” Dicks said.

Craig Lemboe, an economist at Stellenbosch University’s Bureau for Economic Research, said 8 percent was low, and it put the unemployment rate at the same levels of some developed countries, in fact lower than the most recent estimates for unemployment in the US.

He said the estimate from Stats SA was based on the best practice methodology in accordance with International Labour Organisation definitions.

Sharp fought back, saying it was true that Adcorp did not use a nationwide statistical sample. “However, we utilise information from more than 2 million job applicants per annum and the 200 000 jobs that they find each year, compared to the small sample utilised by Stats SA,” he said.

Brian Kantor, an investment strategist at Investec, said he supported Adcorp’s methodology. “We are nowhere close to identifying the employed outside formal employment. We do not know how many immigrants are working,” he said.

Kantor said there was no accurate measure for informal employment as the only measure was people in the formal employment sector.

“I hope the next census will help, if done properly.

“Trends in formal employment are not encouraging at all. Demand for higher wages and strike action lead to unemployment,” he said.

Source: Business Report

South African Macro fundamentals are very impressive

According to the Mpact Management Presentation (pages 50 and 51), which can be found here:

  • Fundamentals of the consumer market continue to improve on the back of growth in GDP and Personal Consumption Expenditure
  • Stable GDP growth outlook
  • Household consumption expenditure supported by recovery in household net wealth, lower debt service costs, strong wage growth and low inflation
  • Consumer confidence remains elevated and consumption growth remains relatively strong
  • Real wage growth
  • Positive correlation between increasing wealth (GDP/capita) and packaging consumption
  • South Africa provides a platform to access other Southern African markets which also present attractive fundamentals
  • Consumer fundamentals and personal consumption expenditure is expected to be underpinned by structural changes in the South African economy including:
    –Fundamental migration of consumers from lower Living Standards Measure (‚LSM‛) to higher LSMs
    –Continued trends of urbanisation
  • LSM Migration: since 2001, have seen a 45% decrease in consumers in LSM 1-3 level, 40% increase in LSM 6-8, and 36% increase in LSM 9-10.

  • SA Urbanisation expected to reach 63% in 2014

Mpact is a recent unbundling from Mondi... details here.

Monday, July 11, 2011

Trends show it is Africa’s turn to shine economically

African athletes have long dominated long- and middle-distance track events – and the continent has led little else. Economically it was way behind the curve, despite a huge endowment of assets under the ground. But, after an unexpected growth surge over the past 10 years, the continent could soon be setting the pace.

And, increasingly, researchers are reporting signs that we are seeing the Ascent of Africa. A number of research reports released over the past few weeks – from the World Bank, the African Development Bank, MasterCard Worldwide Insights and Moody’s Investors Service – have highlighted the opportunities and the challenges facing the continent. And today the UN Conference on Trade and Development will publish another report.

There is good reason for the interest. Growth in sub-Saharan Africa has accelerated from an annual average rate of less than 2 percent from 1978 to 1995 to about 6 percent over 2003 to 2008, according to the World Bank. The MasterCard report says the region was the only one to experience an increase in foreign direct investment during the 2007/08 financial crisis and the global recession that followed.

And Moody’s noted: “This rapid pace of growth has fundamentally altered the region’s economic, political and social prospects.” However, a question mark hangs over Africa’s economic success.

A commodity boom has been responsible for much of the growth – creating a situation that could be inherently unstable. There are two reasons for this. One is the cyclical nature of commodity prices; the other is the political instability that often flows from what has been dubbed “the resource curse”.

Moreover, a strong resource sector often crowds out the manufacturing sector. Because rising commodity prices boost the local currency, a country heavily dependent on resources can struggle to expand its secondary industries. The strong currency makes the manufactured goods more expensive and therefore less competitive in both local and global markets.

This isn’t invariably the case. Many economies around the world have built a substantial secondary industry on the platform of the mining sector – including South Africa. But it is a risk, particularly in the early stages of development.

So is Africa’s recent growth performance sustainable? The answer lies in whether the economies on the continent can diversify out of commodities and the extent to which they can create a domestic market, to reduce their dependency on global demand for exports.

There are encouraging signs that both are moving in the right direction.

The MasterCard report shows growth in the region is not driven solely by resources. It says, between 2002 and 2007, the fastest-growing sectors were hotels and restaurants, which grew an annual average 8.7 percent, followed by financial services at 8 percent, transport and communications with 7.8 percent, construction at 7.5 percent and utilities at 7.3 percent.

It also notes that sub-Saharan Africa is urbanising rapidly, with 52 cities of more than 1 million people, more than double the number in 1990. And it points out that this trend has created a massive demand for infrastructure, goods and services.

There are two obstacles to stronger and sustained growth. One is the poor quality of infrastructure. The second – partly as a result of the first – is that the level of trade between countries is low.

Anything governments on the continent can do to increase integration in the region will drive growth exponentially.

Source: Business Report

Friday, July 8, 2011

Govt already in dazzling position as effective 50% mining shareholder

If the African National Congress Youth League (ANCYL) were sitting in the Cabinet and one of its members advocated mine nationalisation in order to get more State revenue, hopefully someone there would point out that government already gets 50% of the profits from South Africa’s mining activity in direct and indirect taxes.

“The South African government couldn’t be in a better mining position in its wildest and most exotic fantasies,” says Free Market Foundation executive director Leon Louw, who spoke to Mining Weekly in a video interview, following a meeting in Johannesburg hosted by Citibank.

Citi MD DonnaOosthuyse’s hosting of the round table on nationalisation is indicative of the extent to which business is concerned about the issue, which will prejudice the prospects of future generations for decades if it is allowed to go ahead. Oosthuyse is also president of the American Chamber of Commerce in South Africa.

The seriousness of the Chamber of Mines of South Africa about the nationalisation issue has resulted in CEO Bheki Sibiya announcing that Xstrata South Africa executive director Andile Sangqu has been appointed to head a special committee on the issue (see accompanying article on page 9).

Louw makes the point that the South African government has not had to invest a single cent to become that effective 50% shareholder and, better still, is not at any financial risk, sharing only in the profits and never in the losses.

Conversely, if the South African government were to decide to nationalise the mines – which it has repeatedly said is not policy – it would cease to receive that 50% of the substantial profits from the country’s mining industry, which Louw views as “the best possible investment one could imagine”.

Instead, as empirical global experience shows, the State will almost certainly be faced with having to make good mining industry losses, as has happened the world over postnationalisation.

South Africa already has first-hand experience of this with its State-owned enterprises and parastatals running at losses.

The South African government currently already owns 45% of the total fixed capital stock of the South African economy, but in the last decade has accounted for only 29% of economy’s total net investment, a very poor performance.

In contrast, as Chamber of Mines senior executive Roger Baxter recently pointed out, the total revenue of the South African mining sector was R420-billion in 2010 and its total expenditure R440-billion.

One of South Africa’s former State-owned enterprises that has managed to do exceedingly well after escaping the clutches of the State is the synthetic fuels producer Sasol, which suffered losses and gobbled up subsidies during the period when it was State owned.

After it was privatised, Sasol at one stage generated such whopping profits that government considered introducing a windfall tax to squeeze more from the now JSE- and NYSE-listed multinational.

Instead of consuming the government’s wealth, the privatised Sasol now contributes to it, as do most of the private-sector mining companies while the State-owned diamond miner Alexkor consistently disappoints.

Louw’s view is that government simply cannot get more revenue out of the mines than it is already getting. “It’s at a maximum,” he says.

“We have by far the best formula at the moment, from which the government gets money from the mines rather than having to subsidise them in the way that it has to subsidise all its parastatals.”

Louw regards government as a disastrous owner of enterprises and forecasts that it would be as bad in mining as it is with policing, education and heathcare.

“When things are in the hands of the State, they’re generally in a helluva state,” he adds.

Botswana Government Has More Risk

Botswana, which is held up by the ANCYL as a mine nationalisation success story, is not an actual example of mine nationalisation at all, says Louw.

The Debswana diamond-mining company is a partnership between the government of Botswana and private-sector mining company De Beers.

“The Botswana government makes it very clear that it does not tax the mines, but just owns the shares in the partnership companies.

The South African government has a 50% share of the mining companies through direct and indirect taxation but, unlike Botswana, does not have to put up any capital and risk losses.

“So the South African government is better off than the Botswana government, by leaving it entirely to the mining company to do all the mining and run the business,” he adds.

There is widespread understanding of the ANCYL’s objectives, urgency and sense of desperation and that the people the ANCYL are worrying about have been neglected.

Many, from the right to the left of the political spectrum, are prepared to share what could be done, with some ideas seen as relatively radical.

One of the projects that the Free Market Foundation is working on is to promote the conversion of all black-occupied land in South Africa’s black urban townships to full unambiguous freehold title, free of charge.

“Just hand every single black household, including those in the informal settlements, the old apartheid places and the new Recon-struction and Development Programme houses, the title to the properties at no charge.”

That would create an estimated ten- million new land-owning households in South Africa, unleashing land worth in the vicinity of trillions of rands into the hands of blacks and into the economy.

Also mooted is the privatisation of State assets by giving the shares of State-owned enterprises to blacks, and the avoidance of nationalising what the State does not own.

For instance, this could involve placing the shares of State enterprises like South African Airways, Airports Company of South Africa, the South African Broad-casting Corporation, Eskom, the Industrial Development Corporation and other State companies in private black hands.

The foundation may also propose that the State becomes the insurer of national health and not the provider of national health services by turning all the State hospitals, which represent 85% of South Africa’s hospital beds, into black-owned healthcare businesses.

In this way, the State will insure the poor and the rich will insure themselves, which mimics President Barrack Obama’s US health plan.

Youth Unemployment

South Africa is not, however, without its political “time bombs” and the fastest ticking of these is its level of unemployment.
On how to employ the more than 51% of South Africa’s youth between the ages of 18 and 25, Louw points to the many convincing employment models of other countries.

“We don’t have to look further than our new Bric partners, Brazil, Russia and India,” he says.

What Brazil, India and China have done is to free up their economies.

“They liberalised and they’re moving rapidly towards less nationalisation. They’re privatising and cutting taxes and, by doing that, they’re creating jobs and prosperity.

“There’s greater life expectancy and health-care in freer economies, and that’s why most African economies, most Asian economies and most South American economies are now successfully going the opposite of nationalisation and it’s working,” Louw says.

South Africa needs to emulate what works and avoid what fails.

Interchanging Systems

Usually, in a decade or two, nationalisation tends to be followed by a return to privat-isation.

Countries like Zambia, Chile and many others around the world nationalised and then privatised again 10 to 20 years later.

Sometimes the mining companies are confiscated and, in other instances, they are bought out.

In buyouts, the vast amounts of public wealth are allocated to the process that should really have gone to education, healthcare, welfare and housing.

When privatisation returns, many nation states then sell the mining assets back to the private sector at a fraction of the price that they bought them for in the first place.

“The fact is nationalisation results in privatisation after nationalisation has failed.

“The facts are that nationalisation, always and everywhere, has resulted in declining efficiencies, fewer jobs and less income for the government,” says Louw.

Edited by: Martin Creamer

Link to video

Thursday, July 7, 2011

Massive potential oil find in Namibia

Namibia's mines and energy minister Isak Katali announced on Wednesday that Enigma Oil & Gas has hit upon oil reserves estimated at 11 billion barrels off Namibia's coast. The discovery can push Namibia to be on par with Angola which boasts of reserves worth 13 billion barrels.

Katali stated that Enigma Oil & Gas, which is owned by London-listed Chariot Oil & Gas, has discovered 11 fields along the southern coast, the largest of them being the Nimrod Prospect in 350 meters (1,150 feet) depth. He said that if proved successful, this could carry four billion barrels of oil and up. Enigma which holds a 50% equity in the offshore Southern Block along with Brazil's Petrobras intends to kick start production in 2015.

With HRT Oil & Gas, a Brazilian company, looking to invest $300 million in oil and gas exploration in Namibia, Katali anticipates offshore Namibia turning into a great producer of oil and gas in a short time. HRT has already certified about 5.2 billion barrels of potential reserves and would drill three to four wells in that area as early as next year, he added.

Furthermore, the Delta Prospect off Namibia's central coast is also a hot bed for recoverable resources of up to two billion barrels of oil, held by Arcadia Expro Namibia and British firm Tower Resources, he said.

"We expect that six to eight wells to be drilled in Namibia's waters in the next 18 months, the highest number in Namibia's exploration history," he said.

Source: OilVoice

See also: The Namibian Oil Rush