Africa, Business, invesment, Invesments, news, Uncategorized, World Bank, World Bank Group

Africa News January 25, 2014 at 09:20AM

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VENTURES AFRICA – Things have not gone satisfactorily for South Africa’s economy lately. And the bad omen has not abated.

As the country’s crippling platinum strike in the mining sector enters its first weekend, companies, miners, the economy and government are already beginning to count the costs of the damage caused by the strike.

And the costs are massive already.

Three of South Africa-based world’s top platinum producers, Amplats, Implats and Lonmin this week said they expect to lose a combined total of 9900 platinum ounces a day.

Thousands of miners have lost two days’ salary due to the no-work-no-pay strikes. Depending on the number of days the strike will take, their families are in for a rough ride in the coming days.

The South African economy has not been left out of this quagmire. It is already bleeding profusely, losing platinum revenues from foreign customers. South Africa supplies 80 percent of the world’s platinum and with the ongoing strikes, revenue stream and business confidence in the mining sector will be hampered.

In the past week, the South African currency reached an R11 mark against the dollar in what many said was attributable to the current platinum strike. A weak currency is not good for any economy.

The minister of mines Susan Shabangu and the minister of labour, Mildred Oliphant, have had to abandon all other important things in favour of brokering talks between the militant Association of Mineworkers and Construction Workers (AMCU) and the mining companies.

The strike is not good for the government which is looking at holding general elections in the next three months.

These facts confirm the gloomy picture painted in the introduction of this piece.

The strike has been bad for South Africa and that everything needs to be done to avoid further terrible consequences.

The country has struggled to reach more than 3 percent in GDP growth since the outbreak of the global economic meltdown in 2007. And what makes things worse is the fact that South Africa is suffering right at the time when other African economies are recording impressive growth statistics.

South Africa, as Africa’s economic powerhouse, should be driving Africa’s economic growth.

Foreign companies wanting to venture into Africa’s markets used to use South Africa as an entry point before moving into other parts of the continent. However, this strategy is gradually coming to a halt as these companies are arguably being discouraged by strikes in the country’s mining sector, which has offset business confidence.

Additionally, some of these global companies have decided to go straight into African countries without using South Africa as a springboard into the continent. Yet South Africa has everything needed to grow its economy faster including world class infrastructure, expertise, the biggest bourse in Africa and a constitution that guarantees the protection of property rights.

Why are global titans not prepared to use South Africa as catalyst for African expansion anymore?

The reasons include rampant corruption and the recent union militancy. But for the sake of this piece we will focus on the latter.

With the emergence of AMCU a couple of years back, South Africa has experienced an upsurge in militant union activity.

This militancy led to the death of about 50 people in Marikana in August when AMCU went on an illegal wild- cat strike in August 2012.

Some argue that the union does not care whether these strikes will actually worsen the state of its workers and the country going forward.

Joseph Mathunjwa, the President of AMCU, this week said mineworkers in South Africa were suffering already, implying that was something people should worry less about. His union has gotten an amazing support because many believe unions like the National Union of Mineworkers (NUM), which were popular during the apartheid era, have become too pro-capital.

Leaders of the ANC, like the current deputy president of the party, Cyril Ramaphosa, were leaders of NUM during the struggle period.

But these guys became businesspeople and began to discourage union militancy in the companies because their interests were threatened as shareholders.

This has led to the current break-up in the biggest union federation on the continent, the Congress of South African Trade Unions (Cosatu).

Some factions within Cosatu are calling for militancy while others prefer moderation.

But the problem with union militancy is that it is going to bring this country to its knees if left to continue unabated.

Companies are not prepared to pay unskilled rock drillers R12, 500 ($1,127) as an entry level salary.

If this militancy continues, South Africa is facing a deadlock where companies will not be prepared to budge and the workers likewise. This might lead to an unprecedented economic implosion never seen in the history of the country since all-race elections in 1994.

Leaders of AMCU – who have been accused of being ignorant to the implications of what they are doing – are simply ignorant of this fact. But are the chickens coming home to roost for these companies who allegedly backed the formation of AMCU thinking it will neutralise other ANC-aligned unions?

 

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