In 2008/09 when central banks and governments pulled out all the stops to prevent a recurrence of the Great Depression, many economist expressed fears about a double-dip recession. Some predicted the second leg of the global recession would come in 2011 when governments stopped providing bail-outs and central banks cut back on liquidity.
However, events unfolded differently. Early in 2010, long before the expected second dip, grisly secrets were revealed in Greece, sending the world into panic mode.
Fears of a sovereign default in that country were soon compounded by uncertainty about several of its euro zone partners: Portugal, Spain, Italy and Ireland. All had borrowed beyond their means and were in danger of default. Greek debt was soon reduced to junk bond status and sovereign ratings fell like skittles.
To address the problems of excessive national debt, governments in Europe embarked on austerity programmes. And the global recovery, which had barely got off the ground, simply stalled. Disaster was averted by another round of central bank and International Monetary Fund rescue packages in Europe. These failed to do more than avoid the worst and the region remains in recession.
The US, which continued to grow – but only just – is now showing signs of something more. While data are not yet consistently pointing to a strong recovery, there is enough evidence to prompt the US Federal Reserve to talk of cutting back on quantitative easing. Markets failed to look beyond the immediate future and tanked. Though the news that the US real economy is showing sustainable growth provides hope for the future, investors focused on the loss of liquidity in the market and sold assets as fast as they could.
Investment strategies are being reversed and the dollar is the biggest winner. South Africa, along with most emerging markets, is among the losers. But all is not lost. If the global economy regains momentum, local exports will pick up, supporting the rand and stimulating local growth.
Motor suppliers
The establishment of a new automotive development company to improve the competitiveness of local suppliers to the motor manufacturing industry is a positive initiative to ensure the survival and sustainability of the motor industry in South Africa.
It is a dog-eats-dog world in the global automotive industry, with both countries and the automotive companies they are courting for investment involved in competition to get ahead of their rivals.
The official target of the government and South Africa’s automotive industry is for the industry to produce 1.2 million vehicles by 2020. This target is relevant to the industry because it will be indicative of its growth and increased relevance in global motor manufacturing, particularly as South Africa accounts for less than 1 percent of worldwide vehicle production.
The relevance of the target to the government is that the growth in the industry is likely to create new job opportunities.
Vehicle manufacturers already provide employment to about 40 000 people while an additional 350 000 or so are employed in the retail motor industry.
A thriving automotive industry, which is already regarded as South Africa’s leading manufacturing sector and last year contributed 7 percent to the country’s gross domestic product, will also bring in increased tax revenue for the government.
The industry’s growth and sustainability are therefore vital to the country and its citizens. But its success is dependent on an efficient business platform, which is essential for the industry to become more globally competitive, grow its exports, stimulate economic activity and create jobs.
For this reason, it is vitally important that this initiative is successful, particularly as the industry will have little chance of achieving sustainable growth and its 2020 target without a globally competitive supplier network. page 18
BlackBerry
MTN South Africa has made an about-turn from its earlier decision to withdraw its uncapped internet service on BlackBerry devices, according to a statement yesterday.
“MTN’s BlackBerry Absolute customers are currently enjoying a zero-rated [free] unlimited experience. The only difference is that when they check their data availability it will reflect zero while allowing them to continue with the services.
“This means that with MTN’s BlackBerry Absolute service, customers receive free uncapped data access until their next top-up anniversary date,” the firm said.
It added that when customers had depleted the 200 megabytes and checked their data availability they would see that it reflects zero bandwidth although the service continued to function.
The hugely popular uncapped BlackBerry Internet Service (BIS) has always been widely regarded by industry analysts as the singular reason for the BlackBerry’s mass appeal in South Africa.
For a simple fee of about R50 or R60 to access BIS monthly, the internet became accessible to users on an unlimited basis. This boosted internet penetration but also led to smartphones finding their way into the pockets of gardeners and domestic workers. BlackBerry became a household name and the best-selling smartphone brand, notwithstanding its waning popularity in the enterprise market.
But the concept of an uncapped data service from which operators such as MTN could only gain R59 a month in some cases was a sore spot, particularly as they hoped to derive new riches from data sales.
In March, MTN capped data use on BIS to 200 MB and applied a fair usage policy. An MTN spokesman at the time said the majority of customers fell within the 200 MB monthly usage.
MTN paid dearly. In April it reported the loss of nearly half a million subscribers during the first quarter, when it introduced the new plan.
Edited by Peter DeIonno. With contributions from Ethel Hazelhurst, Roy Cokayne and Asha Speckman.