Author: whoownswhom

Corporate citizenship

How are we going uplift the unacceptable levels of vulnerable people in our society? The Black Economic Empowerment (BEE) policy was designed to redress the economic imbalance caused by apartheid, yet, in 2019, it still has a long way to go to bring dignity to all South Africans. Social development must come from the private sector because these are different times and business and the state need to engage more productively if we want to see sustainable change. …

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Malawi Snapshot

Economic growth forecasts remain high for Malawi despite extreme poverty, food insecurity and recent protests over its May elections. President Peter Mutharika, voted in by a small margin in the election, which protesters across Lilongwe and Blantyre say was rigged, said in his state of the nation address that economic growth would reach 5% in 2019 on the back of higher agricultural production and growth in mining, ICT, and financial services. Riots over the election have caused instability in the country where extreme poverty, droughts, cyclones and prior corruption scandals forced Malawi to go to the International Monetary Fund for a US$112m extended credit facility. In April 2018 the IMF approved a new three-year arrangement for Malawi “to support the country’s economic and financial reforms”. The IMF said Malawi has shown progress in achieving macroeconomic stabilisation following two years of drought, with growth rebounding and inflation reducing to single digits, although its fiscal position had deteriorated and the public debt to GDP ratio has increased. “Increased debt service pressures have reduced space for needed infrastructure and social spending,” it said. Malawi’s GDP grew by an estimated 3.7% in 2018, compared to 5.1% in 2017 and 2.7% in 2016. The African Development Bank expects GDP to grow by 4.6% in 2018/19 and 5.6% in 2019/20, driven by agricultural improvements, stable macroeconomic fundamentals, the recovery in commodity prices and foreign direct investment inflows. Still, at least half the population lives below the poverty line and the country is wracked by food insecurity and power cuts, with Reuters saying it is “among the world’s poorest countries, reliant on donor funding and tobacco and tea exports”. The Malawi Project says 85% of the population survives from subsistence farming. A Who Owns Whom’s report on the tobacco industry states that Malawi “is widely regarded as the most tobacco-dependent country in the world”, and its tobacco industry is the country’s second-largest employer, with more than 350,000 farmers and their families dependent on this industry. The report says tobacco is Malawi’s main cash crop, contributing 60% to foreign exchange reserves and 15% to GDP. But annual tobacco revenues have declined 24%, resulting in farmers starting to grow other crops. The industry has, however, attracted investment. Japan Tobacco International is one of Malawi’s largest tobacco buyers and has invested US$450m in the business over past five years, contracting 11,000 tobacco growers, according to the Who Owns Whom report. The African Development Bank says that due to high dependence on rain-fed agriculture, “weather-related shocks are key risks to export commodities such as tea, tobacco, and other products”. The protests add another risk.  As Malawian political scientist and Wits lecturer Michael Jana told AFP: “A significant section of Malawi society is disgruntled and does not want the current government. It’s a divided country.” …

Department of Public Enterprises Should Be Planning its Own Demise

An opinion piece by Who Owns Whom’s MD, Andrew McGregor, looks at the unintended impact of giving a single minister control of the largest state-owned entities (SOEs) back in 1999. Rather than meet their mandate of inclusive growth and poverty alleviation, these critical entities became more easily accessible to outside interests with their own agenda, in turn drawing the ire of tax payers due to corruption and inefficiencies. However, they remain key providers of services, jobs and training. The solution proposed in this piece? …

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Botswana Snapshot

Botswana has a long-held reputation as a stand-out example of political and economic stability on the continent, which has seen its economy grow at an average of 5% over the past decade. Its reputation has begun to show cracks as former president Ian Khama and his chosen successor president Mokgweetsi Masisi lock horns in a battle which has implicated African Rainbow Minerals executive chairman Patrice Motsepe and his sister Bridgette Radebe, executive chairperson of Mmakau Mining. Botswana’s Sunday Standard accused them of supporting a regime change by meeting with Khama and giving financial support to former foreign affairs minister Pelonomi Venson-Moitoi to overthrow Masisi as leader of the Botswana Democratic Party – allegations denied by Motsepe. Khama, who has resigned from the party, accused Masisi of autocratic rule and threatening Botswana’s reputation and its future. Botswana has consistently demonstrated stability and economic growth, albeit with some reliance on the diamond industry. African Development Bank (AfDB) figures show that real GDP growth was an estimated 4.2% in 2018, boosted by the recovery in mining and expansion of non-mining activities such as agriculture and downstream diamond industries. The AfDB forecasts real GDP growth of 3.8% in 2019 and 4.1% in 2020, largely due to increased demand for diamonds, which account for 75% of exports. Focus Economics said Botswana’s economy appeared to lose momentum in the first quarter following “an upbeat, extractives-led” growth in the fourth quarter of 2018. “Despite heavy mining-sector activity and fast-growing tourism, fixed investment looks poised for a breather”, it said, although it still expects economic growth of 4.1% in 2019. Botswana has made efforts to diversify its economy. The AfDB said non-mining sectors would benefit from structural reforms, including amendments to immigration law to improve processing of work and residence permits and steps to encourage domestic manufacturers. In 2013 Botswana got De Beers to move its Global Sightholder Sales to the country and a Who Owns Whom report on the manufacture of jewellery points to the partnership between the government and De Beers for a set amount of rough diamonds to be allocated to locally-based cutting and polishing companies. Since the government invited cutting and polishing companies to set up factories on the condition that they transfer skills to locals, more than 20 international sightholders (purchasers of bulk rough diamonds) have been licensed and a number of businesses in the supply chain, such as logistics, security, catering and construction have developed, providing opportunities for entrepreneurs, the Who Owns Whom report said. But politics may be threatening the status quo. …