2. SA, the World and Africa - A Socio Economic Comparison Presented by: Dawie Roodt 11 July 2007

3. Through the Eyes of the World Source: The Economist January 20-26, 2007 Full page advertisements

4. The Opposition p. 15

6. The Home Team p. 17

9. Missing Something? MacedoniaSouth Africa Taxes  Efficiency  Competitive labour  Access to markets  Stability  Infrastructure  Property rights-  But why say it?

10. 2007: Economic Overview

11. GDP at Market Prices Source: StatsSA and own calculations

12. GDP

13. Relative size to GDP, 2007 Q1 Source: StatsSA

14. Fiscal Policy

15. Background Gold Source: SARB and own calculations

16. Background Source: SARB and own calculations

17. Background Source: SARB and own calculations

18. Monetary Policy

19. Interest rates

21. Capital Expenditure InstituteTime HorizonPlanned Capital Expenditure Sasol2013R62.0bn Eskom2011R150.0bn World Cup 2010: Gautrain Acsa Stadiums 2010 2011 2010 R24.0bn R20.0bn R8.4bn Transnet (Rail, Ports, Pipelines) 2012R78.0bn State (National Budget)2009R372.0bn

22. Economic Impact of the 2010 FIFA World Cup  Direct expenditure of R30.4 bn  R15.6bn to be spent by expected 350,000 tourists  Contribute R51.0 billion to the GDP of South Africa (2006-2010)  Generate the equivalent of 159 000 annual jobs  Additional R7,2 billion will be paid to Government in taxes. Source: Gauteng Tourism Authority and Grant Thornton (Financial mail)

23. Inflation

24. Inflation bracket Source: StatsSA and own calculations

25. Debt Levels

26. Credit Extension Source: SARB and own calculations

27. Household debt to disposable income Source: SARB and own calculations

28. Savings to disposable income of households Source: SARB and own calculations

29. Balance of Payments

30. Source: SARS and own calculations

31. Trade: Imports and Exports per origin, 2005

32. Summary Problems:  Debt Levels  Tax levels  Unemployment  Crime  AIDS  Skills  State inefficiency Positives:  Strong GDP growth  State debt at more sustainable level  More stable interest rate  Capital expenditure plans

33. South Africa, Africa and the Rest

34. Percentage of World GDP ‘04 Source: UNAIDS

35. 4% of African area 23% of African GDP 22% of African Exports 20% of African Imports

36. GDP Source: UN

37. Countries Compared to Provinces Source: UN

38. Africa Average Annual GDP Growth, 1996 - 2005 Equatorial Guinea Zimbabwe Average: 4.2 Source: World Bank, Africa Development Indicators, 2006 South Africa Mozambique Congo Median: 3.6 Angola Oil-exporters

39. Africa’s Divergent Growth Paths Ave: 5.5 Ave: 3.4 Ave: 1.3 Ave: 7.4 Namibia (4.0) Malawi (3.2) South Africa (3.1) Source: World Bank, Africa Development Indicators, 2006 Kenya (2.8) DRC (0.0) Zimbabwe (-2.4) Mozambique (8.4) Botswana (5.7) Mauritius (4.9) Eq. Guinea (20.9) Angola (7.9) Nigeria (4.0)

40. Socio-Economic Development

41. Close-up on South Africa Category20042006 Total population (000)46.6mil47.4mil Annual population growth rate (%)1.1%-0.4% ? Population 0-14 years(%)33%32% Rural population (%)41 Total fertility rate (births per woman)2.82.7 Infant mortality rate (1,000)5360 Life expectancy at birth (years)4642 HIV rate (%) in adults (15-49 years)15.620.0% Poverty (% of pop. on less than $2 a day)34 GDP per capita (PPP) US$11 19212 760 GDP growth rate (%)4.5%5.0% Children of primary school-age who are out-of-school (%)7 Source: Unesco and World Bank Development Indicators

42. Social Services Expenditure

43. Budget 2006/07Budget 2007/08 Functional allocationR260.9bnR296.6bn % of Total Expenditure59.2%59.0% % of GDP14.6%15.4% Expected OverrunR2.5bn

44. Social Services Expenditure as % of Total Expenditure Source: Various Budgets and own calculation

45. Human Poverty Index (HPI): Developing Countries (HPI-1),2004 South Africa 2004 Cuba Mali Average: 30 Median: 27 Source: Human Development Report, 2006 (undp.org) South Africa(1998)

46. Health

47. Healthy Spending…? Budget 2006/07Budget 2007/08 Functional allocationR53.5bnR60.3bn % of Total Expenditure12.1%12.0% % of GDP3.0%3.1% Expected OverrunR0.1bn 2007 Budget: R7.2bn more for HIV-Aids, hospitals and salaries of health workers

48. Health Spending as % GDP Source: Various Budgets

49. Public Expenditure on Health Comparison (2003-04) Source: Human Development Report, 2006 (undp.org) South Africa (‘04&’06) Myanmar Iceland Average: 3.5 Median: 3.0 Cuba Malawi South Africa (’07)

50. Male Life Expectancy at Birth, 2004 Sierra Leone Average: 51 Source: Africa Development Indicators, World Bank, 2006 South Africa Swaziland Tunisia South Africa (2006)

51. Public Health Expenditure (2003) vs. Life Expectancy at Birth (2000-05) Source: Human Development Report, 2006 (undp.org)

52. Physicians Source: Human Development Report, 2006 (undp.org) South Africa 2004 Malawi Average: 147.0 Cuba Median: 109.0 South Africa(2001)

53. Public Health Expenditure (2003) vs. Physicians 2004) Source: Human Development Report, 2006 (undp.org)

54. Percentage of People ages 15-49 Infected with HIV, 2005 Source: Human Development Report, 2006 (undp.org) from UNAIDS (Joint United Nations Programme on HIV/AIDS). 2006 South AfricaJapan Swaziland Average: 2.0 Zimbabwe

55. Number of HIV Positive and Cumulative HIV Deaths Source: Centre for Actuarial Research and South African Medical Research Council, 2004

56. Estimated HIV Prevalence Amongst Antenatal Clinic Attendees, by Age Age group (years) 2000 prevalence % 2001 prevalence % 2002 prevalence % 2003 prevalence % 2004 prevalence % 2005 prevalence % <2016.115.414.815.816.115.9 20-2429.128.429.130.330.830.6 25-2930.631.434.535.438.539.5 30-3423.325.629.530.934.436.4 35-3915.819.319.823.424.528.0 40+11.09.817.215.817.519.8 Source: Avert international AIDS charity

57. Tuberculosis Cases – Prevalence per 100 000 People, 2004 Source: Human Development Report, 2006 (undp.org) South Africa Iceland Djibouti Average: 200 Zimbabwe Median: 83

58. AIDS Source: UNAIDS

59. Summary  Low/average spending on health  Very low life expectancy  Lack/losing skilled medical personnel  HIV and Tuberculosis:  Top prevalence rates in the world  Appears to escalate  Lack of commitment from Government (Department of Health)  Impact on economy Serious competence and planning deficiency PROBABLY THE WORST RUN DEPARTMENT!

60. Eddjucation

61. Bas(e)ing the Outcome… Budget 2006/07Budget 2007/08 Functional allocationR92.0bnR104.7bn % of Total Expenditure19.5%20.8% % of GDP5.2%5.4% Expected OverrunR1.5bn 2007 Budget: R8.1bn more for additional teachers

62. Education expenditure comparison (2002-2004 as available) Source: Human Development Report, 2006 (undp.org) South Africa (’06 & ’07) Equatorial Guinea Lesotho Average: 4.7 Zimbabwe

63. Education Spending as % GDP Source: Various Budgets

64. Pass Rate of SCE and Education Spending Source: HSRC

65. Learners and Educators in Ordinary Schools Source: 2001-2005 SNAP Survey (www.education.gov.za)

66. Number of Schools and Educators in Ordinary Schools Source: 2001-2005 SNAP Survey (www.education.gov.za)

67. Pass Rate of SCE and Matriculation Exemption Source: HSRC 53.4 54.4 47.4 49.348.9 61.7 68.9 70.7 73.3 68.3 57.9 66.7

68. Learners Presenting For Standard and Higher Grade Exams Subject YearSGHGHG as % Tot Accounting 20021001994121629.1 20031066213954827.1 20041129484344227.7 20051201294272726.2 Biology 20022006089846832.9 20031994328681330.3 20042040739608132.0 200521983811161933.6 English (Second language) 20022240836253494.2 20031853535596595.1 Source: HSRCSource: HSRC / Department of Education

69. Learners Presenting For Standard and Higher Grade Exams Subject YearSGHGHG as % Tot Mathematics 20022262953551813.6 20032231563599413.9 20042361553993914.5 20052590994405314.5 Physical Science 20021030445104733.1 20031001665221534.3 20041052455596934.7 20051194916233734.3 Source: HSRC / Department of Education

70. Case Study: Flow of Pupils from Grade 1 to Grade 12 Source: HSRC Note: Repeaters and drop outs not indicated 1 207 066 learners 486 786 learners Home Schooling? 1995 to 2006: 31.7% 31.7

71. Flow in Secondary Schools Source: Dept Education 1.3% - 6.4% 17.0% Repeaters? - 49.3%

72. Grade 1 and Grade 2 Pupils Source: Department of Education - 9.4%- 15.1%- 13.1%- 21.3%

73. Adult Literacy Rate (2005) Source: Human Development Report, 2006 (undp.org) South Africa: 82.2 Mali Estonia Average: 79.5 Median: 87.4 South Africa (1991): 82.1

74. Pupils-Teacher Ratio in Primary Education (Newest data available) Source: UNESCO South Africa 2004 Central African Republic Libya Average: 26.7 Median: 23.0 South Africa (2006)

75. Summary  Above average spending on education  Below average teacher : pupil ratio  Ordinary schools, change between 2001-2005:  Learners: 4.1%  Educators: 7.9%  Schools: -3.2%  Weaker higher grade enrollment  Low critical subject enrollment Obvious efficiency problem but improving

76. Protection

78. Our Fine for Crime Budget 2006/07Budget 2007/08 Functional allocation (Protection services) - Police R79.4bn R34.3 R86.9bn R37.8bn % of Total Expenditure - Police 18.0% 7.8% 17.3% 7.6% % of GDP - Police 4.5% 1.9% 4.5% 1.9% Expected Under run(R1.6bn) 2007 Budget: R6.8bn more for justice and crime prevention

79. Military

80. Military Expenditure, % of GDP (2004) Source: SIPRI (Stockholm International Peace Research Institute). 2006c. South Africa Mauritius Oman Average: 2.3 Median: 1.7 South Africa (’07)

81. Police and Crime 2007 Budget: R2.4bn more to get 190 000 police by 2010

82. Murders (per capita) by Country (1998-2000) Source: UN Survey of Crime Trends and Operations of Criminal Justice Systems, 2000 South Africa ’98-’00 Colombia Qatar Jamaica Venezuela South Africa (2006)

83. Reported Crime Figures for the financial years 1994/95 to 2006/07 Source: Institute for Security Studies (issafrica.org) / saps.gov.za

84. Crime and Policing Facts:  2000: SA murder rate 3rd of 63 countries. (Behind Swaziland and Colombia)  Murder rate per 100 000:  1994/05: 66.9  2005/06: 39.5  World average: 5.5  Policing Expenditure  % GDP: 2.0% (1994), 1.8% (2003)  % budget expenditure: 6.7% (1994), 7.9% (2003), 7.8% (2007 est)  Security personnel outnumber police officers 3:1  2006: Almost 300 000 security officers (1996: 100 000)  2006: SAPS employment complement 155 000, of which around (only) 105 000 officers Source: Institute for Security Studies (issafrica.org) / SAPS Annual Report / own calculations / UN Survey of crime trends and operations of criminal justice systems

85. Police (per capita) by country (2000) Source: United Nations Office on Drugs and Crime, Centre for International Crime Prevention South Africa Costa Rica Montserrat Average: 2.9 Median: 2.6

86. Summary  Average number of police officers  Security personnel outnumber police officers 3:1= (police efficiency?)  8 out of 10 businesses affected by crime  Murders per 100 000 almost 8 times higher than world average!  President Mbeki’s stance on crime? Lack of commitment…Questionable statistics… Be scared, be very scared!

87. Fiscal Efficiency

88. Contribution to Fiscus

89. Budget Revenues (per $ GDP) by Country, 2006 Source: Nationmaster: CIA, World Factbook Libya Kuwait Afghanistan South Africa Average: 0.32 Median: 0.29 Collection cost: 1.3% of revenue; US 0.5%

90. Company Tax Rate, per Country (2006) Source: worldwide-tax.com South Africa Bulgaria Egypt Average: 26.6% Median: 29.0% Ireland USA South Africa + STC (’06) South Africa + STC (’07)

91. Individual Tax Rate, per Country (2006) Source: worldwide-tax.com South Africa Russia Denmark Average: 35.4% Median: 36.0% USA Ireland

92. VAT Rate, per Country (2006) Source: worldwide-tax.com Average: 16.7% Median: 18.0%

93. Fiscal Efficiency: Revenue Summary  Average tax red tape  Individual tax rate: above average (high marginal rate, low threshold)  Company tax rate: above average  VAT rate: below average

94. Financial Management Auditor General:  12% of state departments received clean audit reports (2005/06)  Qualified audit reports of state departments:  2005/06: 32%  2004/05: 21%  Large number of qualifications fell into level two:  Lack of basic financial control Generally deficient financial control, and deteriorating……..leading indicator of corruption?

95. Fiscal Efficiency: Summary  Social Spending: Increasing burden on state  Education: Efficiency problem but improving  Health Care: Serious efficiency problem and deteriorating  Safety and Security: Shocking figures, questionable statistics!  Capital Expenditure: Glimpse of hope

96. Asset Allocation

97. Reason Equities Demand/Rand BondsInflation/Supply/Interest Rates CashShort Interest Rates PropertyProperty Cycle – Heavy Overweight – Overweight – Neutral – Underweight – Heavy Underweight

98. Local Equities, 2006 Economic Sector MCEAAJSE Sector Mining and Quarrying32%34%Mining, Platinum, Gold, Coal Finance, prop and bus. serv30% Banks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv Manufacturing12% Auto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other Personal Service6%5% Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care Transport, storage and comm.6% Telecomm, Transport Trade, hotels and restaurants6%4% Cyc Cons, Food & Drug, Gen Retail, House Goods, Non-cyc Cons Electricity, gas and water4%3%Oil & Gas Agri, Forestry and Fishing3%1%Food Prod Construction2%5%Const & Build 100%

99. www.efgroup.co.za