PUBLIC ENTERPRISES, TRADE & INDUSTRY, TRANSPORT, MINERAL & ENERGY AFFAIRS AND COMMUNICATIONS MINISTRIES MEDIA BRIEFING
13 February 2001
ECONOMY AND EMPLOYMENT SECTOR: MEDIA BRIEFING

Documents handed out:
Public Enterprises (see Appendix 1)
Communications (see Appendix 2)
Trade & Industry
Transport & Mineral & Energy Affairs documents not provided.

SUMMARY
The Ministers of Public Enterprises, Trade & Industry, Transport, Mineral & Energy Affairs and Communications presented the action plan for growth and employment that the president dealt with during his State of the Nation address. The objectives of the action plan are set to move South Africa into a higher growth path, increase competitiveness and efficiency, raise employment levels and reduce poverty and consistent inequalities. This action plan links to the urban upgrading and the integrated rural development strategy to increase the growth rate and employment levels.

DISCUSSION
(Q) What is the action plan or forecast for job creation. Are there any incentives for job creation?

(Q) Can you give an indication of the extent in which South Africa is supplying fuel and electricity to Zimbabwe. Has the supply been reduced in the past weeks, and how much does Zimbabwe owe the Republic of South Africa?

(A) Min. Alec Erwin: "The general forecast made for budgeting purposes will be announced. We will not make any additional forecast. We will be looking at the impact of each of these specific actions on employment etcetera. Therefore no new forecasts are intended."

(A) Min. Mlambo Ngcuka: "On the issue of land prizes – there should not be any generalization on the issue because there are white farmers who have co-operated with the state more on the restitution and on the redistribution. There have been cases where price has been used as a deterrent for government to purchase land for redistribution purposes. The government has instituted expropriation in Lydenburg, Mpumalanga Province. However, this is occurring within the legal framework."

"On the issue of provision of fuel to Zimbabwe – that is a deregulated matter between the industry and the willing buyer."

(A) Min. Dullah-Omar: "With regard to the restructuring of cities, the upgrading of Cape Town International Airport is far advanced. There has also been road development around the airport. The infrastructure with Cape Town is good at the moment. Durban Airport is also undergoing change, even though we envisage that we will be developing the King Shaka Airport, that will take a number of years to develop. In the meanwhile, to cope with the needs of the Durban and KwaZulu-Natal community, Durban Airport is being upgraded."

"Considerable progress has been made with regard to the Johannesburg International Airport. In terms of road development, the South African National Roads Agency has done very well over the past year and will continue with its programme."

(Q) Would you make a comment on the development of rail transportation as there does not seem to be any development in regard to it?

(A) Min Dullah-Omar: "We would like to shift as far as possible from road to rail transports. We want to make rail transport more attractive as far as freight is concerned. In order that we may achieve this goal, overload control in our roads will be enforced."

(Q) What about increasing access to finance to…(inaudible).

(A) Min. Alec Erwin: "With regard to access to finance we do intend tabling a Bill that will deal with disclosure within the whole family of laws called the Community Reinvestment Legislation. The Financial Services Board along with ourselves under the Usury Act are interacting. This is a matter of public discussion and debate. It could be that as part of our Usury law, aspects of the microlending industry and aspects of banking and deposit taking could be reviewed and amended. This would be designed not to undercut the credential strength of our system but to ensure that there are no legal barriers to those financial institutions that seek to go into the new venture market and into the poorer and lower income level markets. There will combined efforts to pull the financial sector further into the new venture market."

(A) Min. Dullah-Omar: "The only extension planned over the next couple of years is the extension of the Khayelitsha line. The decision has been taken to that effect. Our approach is to stop the decline of rail, which has taken place over the past ten years and more. Having stopped the decline we will begin to reverse the process by the rehabilitation of our lines, by improved infrastructure and to make rail more attractive and then extend rail services wherever possible. In doing so we also are looking at inviting the private sector to participate."

(A) Min. Jeff Radebe: "To add on what Minister Omar has said, there will be a lot of investment in rail infrastructure this year of more than half a billion rands for this financial year. Among others, there would be the upgrading of the rail from Durban to Johannesburg and the upgrading of the export channel. There is a concerted effort among ourselves to achieve this objective."

Appendix 1:
MEDIA BRIEFING BY THE MINISTER OF PUBLIC ENTERPRISES
MR JEFF RADEBE
13 February 2001

State Owned Enterprises (SOEs) in South Africa continue to play a critical
role in the current phase of economic restructuring where the focus shifts
from macro economic stability to the development of a sustainable growth
trajectory.

Cabinet has already agreed to focus on specific sectors of the economy
that will enable us to interact meaningfully in a globalising environment.
These growth sectors without exception depend on reliable, accessible and
cost efficient infrastructure relating to energy, transport, and
telecommunications. SOEs are dominant role players in these key sectors of
our economy. It is envisaged that their accelerated restructuring will
contribute significantly to improving the overall competitiveness of our
economy both from a macro and a micro economic perspective. Clearly,
restructured SOEs will play a significant developmental role in South
African society via the integration of public, private and social capital
and expertise. SOEs currently and in the future will also play a
significant role in integrating the economies in Southern Africa, in
particular within the SADC region, by providing an integrated platform for
transport, communications and energy.

With the finalisation of our Policy Framework for the Restructuring of
SOEs in August 1999, the focus this year will be on the accelerated
implementation of the restructuring of the four major SOEs. Already
considerable progress has been made, and restructuring plans have been
approved by Cabinet to ensure that the major parts of our restructuring
initiatives are complete by 2004.

Transport:
In the transport sector, the restructuring of Transnet has already started
to yield results with Transnet declaring a net profit of R780 million for
the first time in many years, despite us inheriting a liability of
approximately R23bn in 1994. The Transnet Pension Fund has been
reconfigured enabling us to retire approximately R8.5bn of Transnet debt,
thereby creating the opportunity for Transnet to invest in critical public
infrastructure that had hitherto been under-capitalised as a result of the
large debt burden borne by Transnet.

The restructuring of Portnet in now underway and will see the separation
of Portnet into a port development agency, port operations and a
regulatory authority. The restructuring of Portnet is envisaged to result
in improved competitiveness of our ports, a greater thru-put and the
stimulation of back- of port logistics, thereby ensuring that we play a
more significant role in south-south trade relations, than we have up
until now. The ports policy will be finalised during this quarter of 2001
and a new and competitive ports tariffing regime will be announced by
December 2001. An increased investment of R3, 5 billion over a three-year
period is envisaged in port infrastructure in Richards Bay, Durban and
Coega. The concessioning of certain elements of port operations would also
commence this year.

Considerable progress has also been made in the restructuring of Spoornet.
Cabinet has also resolved to focus on a strategy, which shifts freight
from road to rail to minimise the considerable financial burden that is
being imposed on us for the ongoing maintenance of roads in South Africa.
During the current year, focused attention would be given to enhancing the
efficiency of our general freight operations and integrating it with our
port operations thereby providing the backbone for a seamless logistic
system which is intended to reduce, both in terms of cost and time, the
movement of freight from point of manufacture to the end user. Whilst the
restructuring model for Spoornet is currently being finalised it is
envisaged that private sector participation would be brought in to our
specialised primary commodity lines, Orex and Coallink within the next
three years.

South African Airways has experienced a successful turn-around, and our
relationship with the SAirGroup (Swissair) has seen considerable benefits
accrue to both parties. Despite the current strategic review currently
underway in SAirGroup, the group has provided us with a tremendous boost
of confidence to our economy, by indicating their intention to retain
their investment in SAA and to give serious consideration to extending
that investment. At this stage we envisaged pursuing an IPO for SAA in
2002.

Telecommunications:
In the telecommunications arena, Government has committed to a process of
managed liberalisation within the sector, to reduce costs, improve
efficiency and competitiveness and encourage new entrants into the sector.
Government is acutely aware of the urgent need to bridge the digital
divide, and the restructuring of the telecommunications sector provides us
with an important element of moving into knowledge based economy.
Following the recent stakeholder colloquium, the finalisation of
telecommunications policy is on schedule for the first quarter of 2001.
The initial public offering of Telkom shares is on track for this year,
subject to market conditions.

SOEs, in particular, Transnet and Eskom, are engaging competitively in the
African telecommunications market. Both Transnet and Eskom are expected to
playing an important role during the issuing of licenses to other national
telecommunications operators in South Africa.

On the information technology front, we have seen the merging of IT
capabilities of Denel, Transnet and Eskom into single entity called
arivia.kom, which started trading on the 8th of January 2001. This company
is now the 4th largest IT company in SA with an expected turnover for this
year in excess of R1 billion. Arivia.kom is well positioned to be a
dominant player in the IT sector not only in South Africa but also in the
Southern Hemisphere.

Energy:
Considerable progress has been made in the restructuring of Eskom. This
year will see the tabling of legislation - the Eskom Conversion Bill -,
which will see Eskom incorporated as a limited liability company. In
preparation for the need for additional energy in 2007, we are currently
developing the regulatory framework for the introduction of independent
power producers into the South African energy market. Noting that Eskom is
one of the most efficient and lowest cost producers of energy in the
world, we will strive to ensure that Eskom expands its power generating
capability on the African continent, whilst simultaneously encouraging and
promoting competition within our domestic market.

Defence:
The defence sector has globally served as a springboard for the
development of high value and high technology manufacturing entities. In
South Africa, the restructuring of Denel is intended to ensure that we
remain competitive in certain niche sectors, whilst also promoting
diversification into the high value civilian and commercial product range.
Noting the consolidation of the defence industry globally, our proposed
partnership with BAE Systems, which is scheduled for finalisation by July
of this year, is intended to provide greater access to global markets,
increased technology interchanges and increased domestic manufacturing
capability.

Government is conscious of the concerns expressed by our social partners,
especially organised labour on potential job losses that may result from
restructuring of SOEs. To address these concerns, our restructuring
program consciously focuses, at the outset, on sectors that have the
potential to create sustainable jobs such as ports, telecommunications,
and energy generation and distribution. Government has also impressed upon
SOEs to engage on re-skilling exercises to ensure that, where appropriate,
workers are in a position to adapt to the changing work environment that
has resulted from changes in the system of production and technology.

In the event of job losses, mutually agreed social plans that integrate
with local economic initiatives are intended to reduce the impact of these
outcomes. For example, Transnet and Telkom have already set aside
approximately R2.3bn for this process.

Appendix 2:
MEDIA BRIEFING BY THE MINISTER OF COMMUNICATIONS
DR I MATSEPE-CASABURRI
13 February 2001

On the 9th February 2001, President Thabo Mbeki outlined, in his address
to parliament, the principal programme areas for the year 2001. The
President reflected on a wide range of socio-economic and political
issues, which need to be addressed in order to accelerate and consolidate
national growth, development and democracy.

In the communications industry, the president highlighted various issues
of which further details are given below.

As the President indicated, government has started with the process of
introducing managed liberalisation of the telecommunications industry with
the hosting of the national telecommunications colloquium in February
2001. The colloquium was aimed at providing a platform for different
sectors of society to make inputs on the future of the telecommunications
policy, and the industry in general. Government envisages finalising the
policy by the end of the first quarter of 2001.

The policy process will ensure greater regulatory certainty in the
telecommunications industry by creating an enabling environment for local
and foreign direct investments. It is envisaged that this process will
improve the competitiveness and efficiency of the sector, thereby enabling
it to contribute to national growth, employment and redistribution of
national wealth.

The President also announced the establishment of the Presidential
International Task Force on Information Society and Development to assist
government in narrowing the digital divide with the rest of the world. The
task force will consists of CEOs from major international ICT corporations
and industry experts.

In addition to the Task Force, government will later this year announce
the appointment of members of the Presidential National Commission on
Information Society and Development, which will deal with skills
development issues in the ICT sector. IT companies, which have been
approached to serve in the commission, have already indicated their
interest.

Government welcomes the recent appointment of the CEO and other senior
managers at the SABC and their collective commitment to continue with the
restructuring of the public broadcaster as envisaged in the Broadcasting
Act of 1999.

Consistent with government's commitment to promoting access to information
as enshrined in the Constitution, the rollout of community radio stations
will continue with a specific focus on under-served areas.

We believe that, given high illiteracy in certain areas, community radio
broadcasting remains an integral part of development communications - a
communication environment that promotes local socio-economic development.
The Ministry is also strengthening this process through the development
and funding of community programming development in collaboration with
civil society and international development organisations.

As part of government's integrated rural development strategy, the
Ministry is expediting the restructuring of the Postbank to enhance its
developmental role. The Postbank will provide financial services to low
income rural communities currently not being serviced by the existing
mainstream financial industry.

The roll-out of the Public information Terminals (PIT) will be accelerated
to provide easy and cost effective access to government information and
services as part of government's programme of utilising information and
communication technologies to improve service delivery in the fields of
education, health, commerce and governance. The rollout of PITs will be
linked with the nodal points identified in the President's speech to meet
the goals of the sustainable rural development programme.

The E-commerce policy process is proceeding as envisaged with discussions
taking place between government and stakeholders as well as amongst
stakeholders. The closing date for submissions to the Green Paper is 31
March 2001.

In line with local demands and needs, as well as international trends,
government has fast-tracked the legislative process and plans to have
E-commerce legislation by the end of 2001.

More specifically, the legislation is aimed at providing the required
certainty in the industry with regard to, amongst others, security,
intellectual property rights, domain names and privacy of e-commerce
transactions.

The President further announced that government would go ahead with the
listing of Telkom with an objective of preparing the telecommunication
parastatal for further liberalisation.

As part of the broader government's commitment to the African Renaissance
and growth in the SADC region, the Ministry will be hosting the ITU Africa
Telecoms 2001 in November 2001. The event, with a specific focus on the
continent, will be attended by local and international private sector
players and government institutions involved in the ICT industry.