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South African president brushes aside possibility
of U.S. sanctions over land reform

CAPE TOWN South Africa (Xinhua) -- South African President Cyril Ramaphosa on Tuesday brushed aside the possibility of U.S.-imposed sanctions over the land reform South Africa is pursuing.

“There is no reason to believe any country will impose sanctions on South Africa for any actions that we take, actions that are constitutional, that are lawful and consistent with international law,” Ramaphosa said while answering questions in the National Council of Provinces (Upper House of Parliament).

He was referring to speculations that the United States might impose sanctions on South Africa for its controversial land reform characterized by expropriation of land without compensation.

“Let’s face it, what we are going through has evoked a lot of questions,” Ramaphosa said.

In a tweet posted on August 22, U.S. President Donald Trump criticized the South African government for “seizing land from white farmers.” Trump said he had asked his Secretary of State Michael Pompeo to closely study the South African land seizures and expropriation, and the large-scale killing of farmers. Trump’s remarks sparked a diplomatic spat between the two countries.

South African Minister of International Relations and Cooperation Lindiwe Sisulu met with the American charge d’affaires in Pretoria and was also in contact with Pompeo over the matter, according to Ramaphosa.

Ramaphosa said his office had not received any communication from the U.S. on the matter.

He said the government was ready to discuss its land reform plans with any country.

South Africa has to keep educating those who were interested in the country’s affairs, but who might not understand the country’s history and processes, said Ramaphosa.

Ramaphosa pointed to “increasing consensus” at home and abroad that the accelerated land reform was essential for South Africa’s well-being.

British Prime Minister Theresa May and Belgian Deputy Prime Minister and Foreign Affairs Minister Didier Reynders voiced support for and understanding of South Africa’s land reform when they visited the country recently, said Ramaphosa.

Referring to Parliament’s ongoing process to review the Constitution to pave way for land expropriation without compensation, Ramaphosa said, “Just relax, this process will end up very well.”

Ramaphosa reiterated that his government would carry out the land reform in light with the Constitution and rule of law, in a way that will strengthen the property rights of all South Africans and not detrimental to the economy.

Illegal land grabs would not be tolerated, he stressed.

He also refuted the notion that blacks can’t till the land and that South Africa would become another Zimbabwe or Venezuela where land reforms have failed.

Ramaphosa voiced confidence that South Africa would find solutions to its problems.

“A lot of people bring good solutions that we should not reject out of hand,” he said.



South Africa business confidence index continues to decline

JOHANNESBURG South Africa (Xinhua) -- The business confidence in the country continues to declines in the last three quarters of 2018, said Rand Merchant bank (RMB) on Tuesday.

The bank released the RMB/Bureau of Economic Research (BER) business confidence for the third quarter in 2018 on Tuesday in Johannesburg. The report showed that the business confidence index (BCI) and activity continues to weaken. At the first quarter of the year, the index was 45 before falling to 39 in the second quarter and 38 in the third one.

“The underlying South African business landscape continues to weaken, with more sectors showing signs of strain. While confidence hasn’t (yet) fallen to the levels observed during the previous (and severe) recession of 2009, we remain deeply concerned about the prospects,” said Ettienne Le Roux, chief economist at RMB.

A total of 1,700 business people in the five sectors which are manufacturing, wholesale, retail, new vehicle trade and building and construction were surveyed during the month ending September 6, 2018. The RMB stated that in the third quarter there were some fears of inflation and high interest rates.

They also stated that the rand fell to over R15/U.S. dollar because of trade tensions between the U.S. and Turkey. The report also observed that there is a renewed disillusionment about the broad policy direction the country is taking.

“It goes without saying, the political and policy factors weighing down on business confidence (such as the government’s land reform plans) must be resolved to produce impetus for an increase in sentiment. This is especially the case now that global headwinds are mounting, domestic public finances are stretched and monetary policy is facing rising inflation risks,” Le Roux said.

Le Roux also said, “Given the historically tight relationship between the RMB/BER BCI and real GDP growth, the renewed downward trend in confidence is disconcerting. On past form, it points to economic growth weakening even further after already slowing from 1.4 percent year-on-year in the first quarter to 0.5 percent in the second quarter.”


South Africa GDP forecast faces dowside risks: Finance Minister

JOHANNESBURG South Africa (Xinhua) -- South Africa is currently bedeviled by a myriad of local and international pressures which threaten the country’s economic growth forecast rate of 1.5 percent this year, said the Finance Minister Nhlanhla Nene on Monday.

Nene said this while speaking at inaugural Thought Leadership Conference hosted by the Government Employees Pension Fund (GEPF) in Johannesburg.

“The outlook for the economy remains fragile. The contraction in gross domestic product growth in the second quarter of 2018 and the downward revision to the first quarter data pose significant downside risks to national treasury’s projection of 1.5 percent growth presented in February,” said Nene.

He pointed out that South Africa is facing subdued business confidence, weak activity in the supply-side of the economy and various headwinds to household spending.

He stated that the country needs economic growth of over 5 percent to meet the demands of the over 57 million people with an unemployment rate of over 27 percent.

Nene said, “Low growth may threaten the overall long-term potential growth rate of the economy if it translates into the inability of a country to implement critical growth-enhancing interventions such as productive infrastructure investment or improving quality education and skills training.”

South African government pays over 17 million people in social grants (old age, children and disability). The low growth rate is making it difficult to meet those obligations and the overall progressivity of tax and fiscal policy, said Nene.

He also observed that the weak growth limits the ability to enact counter-cyclical fiscal and tax policy, which could otherwise be deployed as an additional measure to boost aggregate demand.

“Rising trade tensions and tightening financial conditions have introduced downside risks to the global growth outlook,” Nene said. “In addition, a mix of idiosyncratic challenges in several emerging market economies and broader fears of a deteriorating global environment for trade and dollar funding has impacted countries such as South Africa.”

He explained that South Africa is still heavily reliant on foreign savings to finance the current account deficit as the domestic funding is not sufficient to meets its demand.


South Africa recession will have negative repercussion: Finance Minister

JOHANNESBURG South Africa (Xinhua) -- South African Finance Minister Nhlanhla Nene on Monday said the falling of the country into technical recession will have negative consequences in the country, including low revenue collection.

He was speaking at the 2018 Tax Indaba in Johannesburg.

Last week Statistics South Africa announced that the country is on technical recession following the gross domestic product (GDP) contraction by 0.7 percent in the second quarter this year.

“Lower tax collections have serious consequences and can impact everyone, whether it be through lower expenditures on education or health, or through increases in tax rates to make up for shortfall,” Nene said. “The ability of a government to borrow at reasonable interest rates is also dependent on its ability to collect taxes.”

He warned that any under-performance in our tax revenues will have wide repercussions. Tax collection have declined in South Africa in the last two fiscal years. The government had to raise income tax rates, taxes on capital gains and dividends and subsequently raised the value-added tax rate.

He warned against corruption and called for good governance and ethical leadership.


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