Document Sample
					A newsletter from Credit Guarantee            No 108 – November 2006

                                     Will ‘early bird’
                                           catch the

■ Dealing with dilemmas
  in business ethics

■ How the new Credit Act
  may affect your business

■ New challenges facing
      credit professionals
                        CONTENTS                                CREDIT                  MANAGEMENT
                        COVER FEATURE

                                                                 How the NATIONAL CREDIT ACT
                                                               S   ince 1 June 2006, when
                                                                   the National Credit Act
                                                            (“the Act”) became law, many
                                                                                                       The Act aims primarily to regulate those
                                                                                                       whose core business involves granting credit,
                                                            organisations will have been
                                                            asking themselves whether and
                                                                                                       such as banks and clothing, furniture and
                                                                                                       other stores. But what of those who are not

                                                            how this legislation affects them.
                                                            In particular, they will have
                                                            wanted to know whether they                in the business of routinely providing credit
                                                            qualify as a credit provider that          but do charge interest on extended payment
                                                            must register with the National
                                                            Credit Regulator (“NCR”).                  terms? And what about staff loans?
                        A white-fronted bee-eater
                        with its dragonfly catch in         Given that a credit provider               ANDREW LEONTSINIS, a partner in Bell
                        the Kruger National Park,           cannot legally enter into credit
                        jewel of the Mpumalanga             agreements without registering,            Dewar & Hall Inc, explains.
                        province. See page 4.               this is a fundamental question.
                                                            The answer to it will naturally
                        How the National Credit Act         depend on the type of business
                        may affect your business – p 2      conducted, but before attempt-         any agreement in terms of which       credit provider under at least 100
                                                            ing to give some guidance in this      a charge is levied for payment of     credit agreements, or if the total
                                                            regard, it is perhaps useful to        an invoice after a specific date.     principal debt owed to that credit
                        Bridging the Indian Ocean – p 4     bear in mind the purpose of the        It also refers to agreements in       provider, under all outstand-
                                                            Act, which is essentially to bolster   terms of which two prices are         ing credit agreements, exceeds
                                                            the protection available to con-       quoted to the consumer, the           R500 000. Accordingly, employ-
                        Regulatory change:                                                         higher one applying if payment        ers whose staff loans fall below
                                                            sumers and to cultivate a more
                        Are you prepared?           –p7     responsible approach on the part       is made after a certain date.         these thresholds would not be
                                                            of lenders.                            Although those who provide only       required to register.
                                                                                                   incidental credit need not regis-
                        Mpumalanga struggles to fulfil      It follows that the Act aims pri-      ter with the NCR, their conduct       At arm's length
                        its huge potential          –p8     marily to regulate those whose         remains under its auspices while      For those employers whose
                                                            core business involves allowing        certain of the Act's consumer         staff loans do meet or exceed
                                                            their customers to delay paying        protection provisions will apply.     the thresholds, there is, poten-
                        The proof of the pudding – p 11     an amount owing in exchange
                                                                                                   It follows from the above that        tially, another basis upon which
                                                            for some sort of charge, such                                                registration may be avoided,
                                                            as interest. Obvious examples          the term "incidental credit agree-
                        Credit Guarantee's guide                                                   ment" refers to an agreement          namely, where the employer and
                                                            are clothing, furniture and other                                            employee have a relationship that
                        to Latin/Central America – p 12     stores – some even with epony-         that contains specific terms and
                                                                                                   does not necessarily encompass        would not be regarded as “arm's
                                                            mous credit cards – that allow                                               length”. This is because the Act
                                                            (and often encourage) consumers        all credit agreements that are
                        Economic review        – p 13/14                                           incidental to a business, in the      applies only to credit agreements
                                                            to take now and pay later. Other                                             entered into by parties who do
                                                            obvious examples are banks and         sense of being an occasional or
                                                                                                   minor part of it.                     deal at arm's length.
                        Export awards              – p 16   others in the business of money
                                                            lending.                               Many employers, for example,          To facilitate clarity in this regard,
                                                                                                   offer loans to their staff for        the Act lists certain scenarios
                        Dealing with dilemmas               Incidental credit                                                            in which the parties will not be
                                                                                                   study or other purposes on terms
                        in business ethics         – p 17   But what of those who are not in       that bring the agreements within      regarded as dealing at arm's
                                                            the business of routinely provid-      the ambit of an ordinary credit       length. One such scenario is
                                                            ing credit, but who charge their       agreement. Are these employ-          where the parties are not inde-
                        World markets update       – p 19   customers interest in the event        ers required to register as credit    pendent of each other and thus
                                                            that payment is not made after,        providers?                            do not necessarily strive to obtain
                                                            say, 60 days? Many service pro-                                              the utmost possible advantage
                        New challenges facing
                                                            viders – doctors, lawyers, plumb-      Staff loans                           out of the transaction. Where, for
                        credit professionals       – p 22   ers – and sellers of goods include                                           example, the terms of the loan
2                                                                                                  Once it has been established
                                                            a clause to this effect on their                                             are informal, where the employee
                                                                                                   that the credit agreements in
                                                            invoices. Does this make them                                                does not sign an acknowledgment
                                                                                                   question are not incidental, as
                                                            credit providers?                                                            of debt and where the terms of
                                                                                                   contemplated by the Act, the next
                                                                                                                                         repayment are not definite, it
                                                            The answer is yes, but fortunate-      enquiry, in assessing whether it is
                                                                                                                                         may well be argued that such
                                                            ly for such businesses, parties to     necessary to register as a credit
                                                                                                                                         dealings are not at arm's length.
                                                            this type of credit agreement, the     provider, is whether the relevant
                                                            so-called “incidental credit agree-    thresholds have been met. The         Businesses are going to have to
                             Why risk it without us?        ment”, are not obliged to register.    Act obliges a credit provider to      remain alert to situations in which
                                                                                                   register only if that person is the   they may become credit provid-
                                                            An incidental credit agreement is

                        No 108 – November 2006
                                                                                      The Column
                                                                                          by Roger Munitich
                                                                                          GM: Marketing and R&D,
may affect your company                                                                     Credit Guarantee

ers by virtue of a cession to them of      tion is met. Among these exceptions
a credit provider's rights. This will      is where the consumer is a juristic              is power
occur, for example, with insurers who      person whose asset value or annual
issue policies to merchants to cover
the risk of default by that merchant's
                                           turnover equals or exceeds R1 million.
                                           Also excluded are “large agreements”           P    eople change; it’s a fact.
                                                                                               But when staff change in an
                                                                                       organisation, it is usually impossible
customers. This type of insurance is       where the consumer is a juristic
crucial for businesses with significant    person. Large agreements are mort-          to replace them with equivalent or
debtors books, such as home loan           gage agreements or any other credit         better skills.
institutions and stores that routinely     transaction in which the principal debt     This holds true for any credit pro-
sell their goods on credit.                is R250 000 or larger.                      fessional. And when they've been
                                                                                       dealing with and administering your
An insurer will usually, however, make     There are also certain agreements
                                                                                       credit insurance policy, there is bound
it a condition of settling a claim that    that fall outside the definition of
                                                                                       to be a hiccup in obtaining cover
the merchant cedes its rights against      credit agreement. These include credit      on new buyers; increasing cover on
the relevant customers. This would         extended by an insurer solely to            existing risks or having to deal with
have the effect of placing the insurer     maintain the payment of premiums            potential bad debts and consequent
in the shoes of the credit provider        on a policy of insurance, a lease of        claims.
insofar as its rights against the con-     immovable property and transactions
sumers are concerned, with the result      between certain self-regulated savings      Credit Guarantee provides monthly
that, if the relevant thresholds are       institutions and their members.             client training workshops that are not
met, the insurer would be obliged to                                                   only designed for new clients, but for
                                           Apart from these exceptions, the Act        those new staff members as well.
register as a credit provider.
                                           applies to “every credit agreement
                                                                                       The more your administrator knows,
Associated person                          between parties dealing at arm’s
                                                                                       the better the policy works for you
                                           length and made within or having an
It is important to note that the                                                       and ultimately, the incidence of incur-
                                           effect within the Republic”. The term
thresholds apply to credit agreements                                                  ring bad debts is minimised and you
                                           “having an effect within the Republic”      are almost assured of your claims
in respect of which a person, or any       is far-reaching and effectively ensures
associated person, is the credit provid-                                               being paid! All of this simply means
                                           that most cross border credit agree-        improved profitability.
er. It would thus appear that even if a    ments fall to be regulated by the Act.
company falls below the threshold, it                                                  Sounds good? Book your credit staff
is required to register as a credit pro-   Reporting obligations                       on one of our training sessions via
vider if, together with an associated                                                  our website
                                           The Act imposes substantial report-
person, it meets the threshold.                                               or just
                                           ing obligations. Credit providers must      e-mail or call
In relation to a company, the term         submit reports about their credit           011 889 7561.
“associated person” includes its hold-     agreements (unless they are pawn
ing company, subsidiaries and fellow       transactions or incidental credit agree-    It’s free and we’ll even throw in some
subsidiaries. Accordingly, the credit-     ments), to the National Credit Register     snacks as well.
providing activities of a group of com-    or to a credit bureau, encompassing                         * * *
panies must be assessed as a whole         details about the consumer, the terms
to determine which companies within        of the agreement, any changes to            Exporters who have not yet regis-
the group must register as credit          the agreement and its termination. It       tered with SARS for exporting to EU
providers. If all of those that provide    would appear that all credit providers,     or SADC countries may be compro-
                                                                                       mising their duty preferences.
credit, when assessed together, meet       whether required to register or not,
the threshold, then all such companies     are required to submit these reports.       According to Deloitte's latest news-
must register separately.                                                              letter, SARS indicated on 18 August
                                           The Act contains numerous provisions
                                                                                       2006 that exporters exporting to the
On the other hand, a credit provider       designed to protect consumers, includ-      EU and to SADC have to be registered
who conducts business at or from           ing the right to confidential treatment.    specifically for exportation to the
more than one location, is required        It is no longer possible to obtain          member states mentioned.
to register only once. The registra-       reports concerning a person's credit
tion process would thus appear to be       record in absence of the person's           SARS requested exporters to register
slightly less burdensome for a compa-      permission. Credit providers would          by submitting form Annexure DA
ny that offers credit through branches     therefore be well advised to ensure,        185.4A2. The registrations were to        3
situated in different locations, rather    perhaps during the credit applica-          be finalised by 2 October 2006, oth-
than through separate legal entities.      tion process, that such permission is       erwise SARS would not issue move-
                                                                                       ment and SADC certificates which
Some exceptions                                                                        would impact duty preferences.
                                           Eligible credit providers should have
There are a few types of credit agree-     applied for registration by August
ments to which the Act does not            2006. The regulations issued in terms
apply, so that they would not have to      of the Act are now final and contain
be taken into account when assessing       the prescribed forms on which the
whether the threshold for registra-        various reports must be submitted.

                                                                                                        No 108 – November 2006
     Indian Prime Minister
     Manmohan Singh (left) and
     SA President Thabo Mbeki
     arrive for a welcoming cer-
     emony in Pretoria during
                                    Bridging the
     Singh's October visit to
     South Africa.
     Behind them are their wives,   Political history and                          minister Manmohan Singh as head of gov-
     Kaur Singh and Zanele          current government                             ernment. The president is elected by the
     Mbeki.                                                                        electoral college comprising elected members
                                    The Indus Valley civilisation is one of the    of both houses of parliament and the leg-
     (AP Photo/Denis Farrell)
                                    oldest in the world and dates back at least    islature of the states for a five-year term.
                                    5 000 years. India gained its independence     The next election for the president is due in
                                    from British rule in 1947 and soon thereaf-    August 2007 and the prime minister will be
                                    ter the subcontinent was divided into India    chosen from the majority party following
                                    and Pakistan. The state of Kashmir continues   legislative elections in may 2009.
4                                   to be the main source of conflict between
                                    the two countries as its Hindu Maharaja        The Indian National Congress-led coalition
                                    chose to join India in 1947, although a        government will focus on achieving a bal-
                                    majority of his subjects were Muslim.          ance between its reform objectives and the
                                    India is made up of 29 states and six union    demands of its political allies. Government
                                    territories.                                   is expected to try to distribute the benefits
                                                                                   of economic growth more widely during the
                                    President A P J Abdul Kalam has been chief     remainder of 2006 and 2007.
                                    of state since July 2002. The May 2004
                                    national election led to the rise of prime     India and the US signed a deal in early
                                                                                   March that recognises India as a "country

    No 108 – November 2006
 COUNTRY                    REPORT

India, the world's largest democracy, is also a land of mega-contrasts between prosperity
and poverty. With GDP growth consistently around 8%, India is set (like China) to become
tremendously influential in the decades to come. Yet despite its economic liberalisation
and progress, it still faces persistent poverty with about 260 million people still surviving
on less than $1 a day and about half the country’s young children being undernourished.
Against this background, trade ties between India and South Africa are booming.

with advanced nuclear technol-         services sector further strengthened      About 260 million people are still         Compiled by
ogy", implying the US’s acceptance     from its double-digit growth over         surviving on less than $1 a day.
                                                                                                                            LILY MOODLEY
of India as a fully-fledged nuclear    the past two years to remain the          About half the country’s children
power. The US will end sanctions       economy’s leading sector, contribut-      below the age of six are under-            Credit Guarantee
on India for not signing the Nuclear   ing over 60% of GDP.                      nourished. Over half the homes lack
Non-Proliferation Treaty and agreed                                              electricity and one state is not even      Economic Services
                                       In a recent report, The World
to provide India with advanced                                                   connected by road. Only one in 50          October 2006
                                       Bank praised India’s GDP growth.
non-military nuclear technology and                                              households has a credit card and
                                       Its view on the country’s growth
fuel.                                                                            one in six houses has a fridge.
                                       rate strategy is that it is becoming
                                       increasingly successful and India         According to The Economist, gov-
Economic developments                  would (like China) become tremen-         ernment does not have the funding
India’s diverse economy that           dously influential in the decades         to address these issues, given its
includes traditional village farm-     to come. Globalisation is essential       huge budget deficit whose aver-
ing, modern agriculture, a wide        and for growth to continue at the         age between 2000 and 2004 was
range of modern industries and a       present 8%, the Bank advised that         exceeded only by that of Turkey.
multitude of services, which con-      reforms cannot be gradual as India        The little that government spends
tribute significantly to economic      needs to build on the platform pro-       is said to fall prey to corruption
growth, has also benefited from        vided by the global economy.              between government coffers and
its extensive population of 1,1 bil-                                             the intended parties. India needs to
                                       A committee set up by the Reserve
lion. India’s GDP of $800 billion                                                prioritise improving the public sec-
                                       Bank of India (RBI) will revisit the
makes it the world’s twelfth-largest                                             tor’s ability to deliver basic services,
                                       issue of making the rupee fully
economy and Asia’s third largest. It                                             to sustain growth at high levels and
                                       convertible. The committee has
is expected to become the world’s                                                to distribute the country’s riches

Indian Ocean
                                       recommended that the transition be
third largest economy by 2020.                                                   more evenly amongst its citizens.
                                       slow. The rupee is convertible for
The economy grew at an average         the purposes of trade, but there          The World Bank has warned India
rate of more than 7% in the decade     are controls on capital outflows          that its failure to reform the public
since 1994, while simultaneously       and on certain inflows such as bank       sector will render high growth and
reducing poverty by 10%.               borrowings. The RBI intervenes to         policy ineffective in ending poverty
India recorded robust expansion        minimise volatility. Reformers feel       and unless checked, the growing
for the third successive year during   that full convertibility is required to   inequality between regions, and
2005-06, supported by sustained        reduce the cost of capital and thus       between town and country, will
manufacturing activity and impres-     attract investment so that India          heighten social tensions. If India                                  5
sive services sector performance.      can sustain present growth levels         capitalises on its demographic divi-
GDP growth was 8,5% in 2003-           but the committee recommends              dend (young population is expected
04, 7,5% in 2004-05 and 8,4% in        a three-phase, five-year gradual          to add 71 million in the next five
2005-06. GDP growth in 2006-07         approach.                                 years), growth can be faster.
is expected to be 8,3%.                Despite the economic liberalisa-          In economic terms, India is still
Industrial production continued its    tion and progress achieved by Mr          poor and small. It holds a 6th
momentum during 2006, buoyed           Singh’s government, India still faces     of the world’s population, but
by strong manufacturing activity       huge challenges, the most startling       accounts for 1,3% of the world’s
– the key to overall growth. The       one being its persistent poverty.         exports and 0,8% of foreign direct

                                                                                                                            No 108 – November 2006
    COUNTRY              REPORT

                      investment (FDI). At $728, its GDP        for 2%-3% of the total, but is grow-       India and South Africa
                      per head is less than half that of        ing at about 18% a year and is
                      China.                                    encouraging a rush of property devel-      The Indian government’s recent visit
                                                                opment.                                    to SA targeted the strengthening of
                      RBI’s foreign exchange reserves stood                                                south-south ties and increased trade
                      at $166bn on 15 September 2006.           Change is imminent and a local retail      between the two countries. Prime
                      Foreign direct investment totaled         giant, Reliance Industries (a petro-       minister Singh said that both coun-
                      $1,7bn during April-June 2006 and         chemicals, oil and textile company),       tries had the potential to grow trade
                      FDI in June grew 102% compared            is spearheading expansions with its        between them from the 2005 figure
                      to June 2005. Total debt to GDP           ambitious plans involving $2,2bn           of $4bn to $12bn over the next four
                      fell from 17,3% in Mach 2005 to           worth of investments to create             years. He urged SA companies to take
                      15,8% in March 2006. The currency         1 800 supermarkets employing about         advantage of India’s pool of skilled
                      composition of India’s external debt at   500 000 people. Possible obstacles to      labour.
                      end-June 2006 revealed that the US        its plan include poor infrastructure,
                      dollar continues to be the major cur-     land grabs and bureaucracy.                India’s exports to SA grew to $1,6bn
                      rency, accounting for 46,1% of total                                                 in the year to March 2006 – up 58%
                      external debt stock.                      Infrastructure problems                    – and imports grew to $2,5bn – up
                                                                and plans                                  11%. A large portion of the increased
                      Booming software sector                                                              imports from SA related to gold. SA
                                                                In order for India to catch up to
                                                                                                           imports textiles and clothing, leather
                      The rapidly growing software industry     China’s levels of infrastructure per
                                                                                                           and vegetable products, while Indian
                      is increasing services and modernising    capita, it will have to invest 12,5% of
                                                                                                           imports from SA include minerals,
                      India’s economy. Revenue from the IT      GDP per year until 2015 – four times
                                                                                                           chemicals base, metals, textiles and
                      industry reached a turnover of $24bn      its current level. Over a third of the
                      in 2005-06, while software exports        Indian firms blame poor infrastructure
                      surpassed $22bn. The cellular mobile      as their biggest hurdle to expanding       President Kalam invited SA to partici-
                      market was expected to surge to           their businesses. An investment cli-       pate in the creation of an internet-
                      over 100 million users by the end of      mate assessment report estimates that      based "world knowledge platform"
                      August 2006.                              India could lose as much as 8% in          to promote science, technology and
                                                                                                           economic development. The proposal
                                                                                                           follows an initiative launched by the
                                                                                                           president two years ago for the cre-
    In order for India to catch up to China’s levels of infrastructure per capita,                         ation of a pan-African e-network for
                                                                                                           the use of Indian satellites for tele-
    it will have to invest 12,5% of GDP per year until 2015 – four times its                               medicine and tele-education between
    current level. Over a third of the Indian firms blame poor infrastructure as                           Africa and India.
    their biggest hurdle to expanding their businesses.                                                    Tata Iron and Steel (Tisco) has gained
                                                                                                           approval to build a $103 million
                                                                                                           ferrochrome plant in Richards Bay
                                                                                                           with most of the plant’s production
                      Thriving retail industry                                                             earmarked for the export market.
                                                                annual sales due to power problems.
                                                                                                           The plant will be fully operational
                      According to a study by its depart-       India also lacks expressways linking its
                                                                                                           by 2008-09. Indian investment,
                      ment of consumer affairs, India has       major centers and only has 3 000 km
                                                                                                           driven largely by Tata, is likely to
                      the highest density of retail outlets     of four-lane highways.
                                                                                                           exceed $500 million over the next 12
                      (15 million) in the world. The US has
                                                                Maritime trade can expect a major          months. SA companies, including SAB-
                      900 000 but its market value is 13
                                                                boost in the years to come with the        Miller and Airports Company of SA
                      times bigger. The Indian retail indus-
                                                                planned strengthening of road and          (Acsa) are also aggressively seeking
                      try accounts for 7% of total employ-
                                                                rail connectivity to the major ports.      Indian contracts.
                      ment and 10% of GDP. The industry
                                                                Projects worth $1,5bn to connect rail
                      is protected from foreign competition                                                Global trade
                                                                and road to ports are in the pipeline.
                      and despite some relaxing, still bars
                                                                Ten road projects will be completed in     India’s total exports in 2005-06
                      foreign investment for most of the
                                                                2007 and eight rail projects are ear-      amounted to $105bn and imports
                      sector. But foreign giants like Wal-
                                                                marked for completion in 2008.             $156bn. The country’s major trade
                      Mart and British and French rivals
6                     Tesco and Carrefour are attracted to                                                 partners include US, China, UAE, UK,
                                                                Major corridors connecting the ports
                      what they call India’s booming econo-                                                Hong Kong, Belgium, Singapore, Aus-
                                                                on the eastern and western coasts are
                      my and fast-growing middle class.                                                    tralia, Germany and SA.
                                                                part of the five-year plan. At present,
                                                                the 12 major ports handle 75% of           Japanese businessmen want to part-
                      Government is committed to a 15-
                                                                the maritime cargo. The committee          ner Indian software expertise to help
                      year old process of deregulating and
                                                                of infrastructure projects a compound      the country become a manufacturing
                      opening up the Indian economy. Most
                                                                annual rate of growth of 7,4% at           hub. Japan is interested in combin-
                      Indian shops belong to the "unorgan-
                                                                these ports by 2014.                       ing its manufacturing with India’s
                      ised sector" run by families, while
                      more "organised" retailing accounts                                                  software knowledge to make India a
                                                                                                           manufacturing centre.

    No 108 – November 2006

                                                                                                                  practices, are all common themes
                                                                                                                  in the regulatory landscape of
     Responding to regulatory change:                                                                             most comparable economies.
                                                                                                                  According to Austin, it is

                                                                                                                  extremely important for SMMEs
                                                                                                                  to participate in the consultative
                                                                                                                  process that government puts in
                                                                                                                  place in developing policy frame-
                                                                                                                  works. They need to participate
       South African companies are often naïve when it comes to                                                   by contributing their thinking to
       regulatory change. In many cases, they react to legislation                                                forming government’s policies.
       and regulation only once this has been enacted.                                                            Those who participate in the
                                                                                                                  process are generally received by
                                                                                                                  regulators with a greater degree
                                                                                                                  of openness.
   T   here are a significant
       number of regulatory
interventions impacting on busi-
                                     impacts every part of it,” contin-
                                     ues Austin.
                                                                           often naïve when it comes to
                                                                           regulatory change as very little
                                                                           resource is allocated to planning
                                                                                                                  Different response
                                     Many companies still do not have
nesses operating in South Africa.                                          for this. In many instances, they      Regulators may have a differ-
                                     well developed risk processes.
                                                                           react to legislation and regulation    ent response to companies who
“Regulation is used by gov-          As a result, they may not identify
                                                                           only once this has been finally        do not contribute constructively
ernment to achieve its policy        regulatory or other compliance
                                                                           enacted. This may be three to          to the process and then criticise
outcomes,” says Phillip Austin,      requirements where there is
                                                                           four years after the policy under-     the final outcome. Government
audit partner at Deloitte. “Busi-    a likelihood of a high negative
                                                                           pinning the regulation is first for-   would like to hear from SMMEs
ness needs to be pro-active in       impact for non-compliance.
                                                                           mulated, as can be seen with the       as much as from big business.
engaging government in the
                                     As South Africa moves towards         Draft Consumer Protection Bill.
development of policy and the                                                                                     Through developing a deep
                                     a European social model – a free
subsequent formulation of                                                  When business criticises regula-       understanding of the objectives
                                     market subject to significant
regulation to achieve those policy                                         tion, this often does not provide      of regulation, planning new proc-
                                     regulatory oversight – business
outcomes.”                                                                 government with a different            esses and embedding the organi-
                                     needs to embrace the spirit
                                                                           regulatory platform which would        sational response, business is able
Companies need continually to        of the regulation. If business
                                                                           ensure that its policy objectives      to leverage this level of prepar-
consider the impact of emerg-        does not respond in a manner
                                                                           are met. For example, a policy         edness to their advantage.
ing policy and regulation,           which achieves government’s
                                                                           objective within the National
through in-house experts and         desired objectives, regulation will                                          For example, a business may
                                                                           Credit Act is to prevent borrow-
business advisors, so as to plan     toughen.                                                                     gain more public trust through
                                                                           ers becoming trapped in debt
their response. As companies
understand what regulations
are coming they are able to plan
strategies and take steps to             It is not good enough to only have a compliance officer or a legal depart-
better leverage advantage in the         ment; compliance needs to be embedded in the business at every level.
space regulated.
For example, companies need to
be prepared for consumer pro-
                                                                           spirals and over-indebtedness.         being able to make positive state-
tection legislation when develop-    This can be seen in the broad-
                                                                           Criticising the provisions of the      ments regarding compliance with
ing their strategies for launching   based Black Economic Empow-
                                                                           Act without providing a realistic      regulation designed to protect
new products into the market-        erment space. In 1994,
                                                                           alternative is meaningless.            consumers. Or, through mapping
place. Such legislation could        government asked business to
                                                                                                                  regulatory requirements to an
have major implications for the      transform and provided an ena-
                                                                                                                  organisation’s business processes,
manner in which companies take       bling environment through the         A common theme                         business may be able to reduce
their product and service offering   Employment Equity Act. As this
                                                                           It is worth noting that South          the cost of compliance and
to market.                           approach did not produce the
                                                                           Africa is not over-regulated when      thereby enhance its competitive
                                     desired results timeously, the
                                                                           compared to many other devel-          position.
Attractive to investors              President introduced new regula-
                                                                           oping countries. While it may
                                     tion to drive business towards                                               “It needs to be stressed that all
“Organisations that are prepared                                           not be possible to implement                                                 7
                                     that goal.                                                                   regulation is designed by govern-
and structure themselves to                                                some regulatory requirements at
                                                                                                                  ment to achieve policy objectives
achieve compliance are attractive    More regulation                       a comparable cost, the nature of
                                                                                                                  and, as these objectives are met
to investors and other stakehold-                                          and the rationale for the regula-
                                     If the economic landscape is not                                             and sustained, the need for
ers. It is not good enough to                                              tion have a common theme with
                                     effectively transformed, then                                                interventions through regulation
only have a compliance officer                                             many other markets. For exam-
                                     business can expect more strin-                                              lessen,” concludes Austin.
or a legal department; compli-                                             ple: money-laundering, protection
                                     gent regulation in the future.
ance needs to be embedded in                                               of privacy, addressing consumer
the business at every level as it    South African companies are           rights and responding to corrupt

                                                                                                                         No 108 – November 2006

          MPUMALANGA struggles
       Richly endowed with natural resources
                                                Overview of the economy
       and tourist attractions such as the
                                                With Nelspruit as its capital, Mpumalanga occu-
       Kruger National Park, Mpumalanga         pies 6% of the surface area of South Africa. It
                                                has a diversified economy which includes agro-
       ("place of the sunrise") has the         processing, petrochemical, stainless steel, mining
                                                and energy and a strong tertiary service sector,
       potential to become one of the richest   thus reducing its exposure to external shocks.

       provinces in South Africa.               Agriculture
                                                More than 68% of the land in Mpumalanga
       But a strenuous challenge will be to     is utilised by agriculture. The farming indus-
                                                try encompasses almost every type of animal,
       reduce the 38% unemployment level.       crop, fruit and vegetable. Nelspruit is a trading
                                                centre for the surrounding fruit growing areas
                                                where the sub-tropical climate provides optimal
                                                growing conditions for citrus and tropical fruits
                                                including mangoes and bananas.
                                                The province is the primary forest area in South
                                                Africa, accounting for just over 40% of all
                                                forestry plantations and home to one of South
                                                Africa’s largest paper mills (Sappi's Ngodwana
                                                mill). Natural grazing covers almost 14% of


    No 108 – November 2006
to fulfil its huge potential
 Mpumalanga with animal products being the         international and domestic tourist destination.   thrust of the region and its upgrading will
 second largest generator of gross income          Mpumalanga is currently ranked the seventh        enable it to play a pivotal role in reduc-
 from agriculture. The main products are beef,     most attractive destination for tourists in       ing transport-related export costs, thereby
 mutton, poultry and dairy products.               South Africa and receives an average of over      improving the global competitiveness of prod-
                                                   1 million foreign tourists per annum.             ucts produced in the region.
                                                   Transport                                         Maputo port is much closer to the South
 Global demand growth for stainless steel
                                                                                                     African provinces of Gauteng and Mpuma-
 is running at about 6,5% per annum and            The province's well-established infrastructure
                                                                                                     langa than any of South Africa’s own ports.
 Mpumalanga province is a large manufactur-        base, such as road and rail networks, services
                                                                                                     The Mozambican government is trying to
 ing base for stainless steel. It is home to the   and facilities, are on par with those in devel-
                                                                                                     ensure full use of the installed capacity of
 world’s fifth largest stainless steel producer,   oped countries. It also has a state of the art
                                                                                                     the Maputo port and the Mozambican Rail
 Columbus Stainless, which has the capacity        international airport, Kruger Mpumalanga
                                                                                                     Company is now rehabilitating the railway
 to produce over 700 000 tons of stainless         International Airport, which links with major
                                                                                                     line from Maputo to Ressano Garçia, on the
 steel flat products per year. The province also   domestic and international airports.
                                                                                                     border with South Africa. The work is to be
 accounts for 83% of South Africa’s coal pro-
                                                   The Maputo Corridor, which links Nelspruit        completed before the end of this year and
 duction. A coal liquification plant in Secunda
                                                   directly to Gauteng and Maputo, has resulted      is expected to increase the volume of cargo
 is one of the sites for the country’s two
                                                   in a booming city. Now the largest CBD along      handled by the railway from 2,1 million tons
 petroleum-from-coal extraction plants, which
                                                   South Africa’s major eco-tourism belt, there      in 2005 to 2,5 million tons this year.
 is operated by petrochemical company Sasol.
                                                   is huge development in both residential and
 Tourism                                           commercial sectors.                               Economic highlights
 Its scenic beauty and natural wonders have        The port of Maputo is a crucial infrastructural   The population of Mpumalanga is forecast to
 turned the province into the fastest growing      component of the new outward economic             grow to 3,7 milion by 2008. The creation


                                                                                                                       No 108 – November 2006

                                                                                                                            Tourists admiring giraffes from a game viewing vehicle at a private
     South African golf champion Ernie Els (right),                                                                         world's best game reserves.
     course designer Greg Letsche (centre) and Dirk
     Els (left), Ernie's brother, inspect the layout
     of the Ernie Els Signature Golf Course being
     developed near Dullstroom in Mpumalanga.
     The course is one of several being developed
     along with other "eco estates" which draw on
     the natural beauty of this province.

                                                                                      Shayne Robinson / PictureNET Africa

                   of jobs for the growing population in the    Economic output                                                                The construction of a R600 million sta-
                   province still remains a challenge, with                                                                                    dium in Nelspruit to host some of the
                   unemployment estimated at 38%. Average       Recent developments                                                            matches during the 2010 Soccer World
                   annual growth for 2000-2004 was esti-        The Mpumalanga Economic Growth Agency                                          Cup has started. Legacy projects, those
                   mated at 2,8% against a national average     (MEGA), which was officially launched in                                       that are being built for use during the
                   of 3,5% over this period and was about       mid-September this year, has a mandate                                         tournament to benefit the area beyond
                   4,1% in 2005.                                to drive economic transformation, stimu-                                       2010, include a stadium, an interna-
                                                                late trade and investment, ensure growth,                                      tional convention centre and road and rail
                   Growth in 2005 was led by the construc-
                                                                development, equity and empowerment                                            improvements.
                   tion sector followed by the manufacturing
                   and transport sectors. The agricultural      and promote prosperity.                                                        The Mpumalanga department of local
                   sector is showing signs of recovery in       There is a huge buyer interest in "eco-                                        government and housing completed eradi-
10                 contrast to declines experienced in the      estate" type developments which draw                                           cating bucket toilets in all its formal areas
                   previous two years, due to extensive sup-    on and preserve the natural beauty in the                                      throughout the province at the end of Sep-
                   port being provided to emerging farmers.     area. Due to strong demand for such                                            tember this year. The department began
                   Mining has remained steady over the past     properties, prices are forecast to rise                                        its project last year and spent almost R200
                   few years and is the major employer in the   17-18% over the year. Construction of                                          million to complete it, becoming the first
                   region. Mpumalanga was the fifth largest     the new R450 million regional shopping                                         province in the country to do so and way
                   contributor towards the national GDP with    centre, Highveld Mall, began early this                                        ahead of the 2007 deadline for formal
                   an estimated regional gross domestic prod-   year in Witbank. The mall is set to open in                                    areas.
                   uct of R72,3bn for 2005.                     April 2007, creating an estimated 1 000
                                                                permanent jobs.

        No 108 – November 2006
                                                                                                                               The proof
game reserve near the Kruger National Park. Mpumalanga boasts several of the
                                                                                                                               of the
                                                                                                                               Mike Truter, CEO of Credit Guarantee

                                                                                                                                  E    very year, Credit Guarantee appoints a
                                                                                                                                       completely independent research company*
                                                                                                                               to conduct a “Client Satisfaction Rating Survey” in
                                                                                                                               order to determine whether we are meeting one of
                                                                                                                               our key strategic objectives, namely a 90% client
                                                                                                                               satisfaction level.

                                                                                                                               This year the survey was
                                                                                                                               conducted in our Export
                                                                                                                               Division: Key Account
                                                                                                                               unit during September
                                                                                                                               / October. Firstly, on
                                                                                                                               behalf of my Exco team,
                                                                                                                               I would like to extend a
                                                                                                                               word of thanks to our
                                                                                                                               export clients for giving
                                                                                                                               so freely of their valu-
                                                                                                                               able time to answer the
                                                                                                                               many questions posed
                                                                                            Naashon Zalk / PictureNET Africa

                                                                                                                               to them by the research
                                                                                                                               company. Your input
                                                                                                                               is vital and a valuable
                                                                                                                               management tool that
                                                                                                                               allows Credit Guarantee
                                                                                                                               the opportunity to look
                                                                                                                               inwards and improve
                                                                                                                               those areas where the need arises.

                                                                                                                               It is always a very pleasant task to have to report
                                                                                                                               that the survey results are overwhelmingly positive
  Emerging opportunities                       lower-priced imports. These companies                                           and again exceed the 90% objective set, achieving
                                               are already faced with declining profits                                        a client satisfaction rating in the Export Division of
  Opportunities exist for investment in
                                               amid a protracted downturn in the global                                        93%. In the service industry, this is almost unheard
  agriculture and agro-processing, steel,
                                               paper market.                                                                   of and is testament to the efforts of that most
  forestry products, tourism, and mining.
                                               Massive job losses have also been expe-                                         valuable asset – our dedicated staff.
  Challenges for the region                    rienced in the forestry sector due to
                                               changes in the procurement systems of                                           This particular milestone means that all client-cen-
  The drop in tobacco production has           major suppliers of timber for manufactur-                                       tric areas of the company – our Domestic Division:
  caused two processing plants of the SA       ers. This has had a negative effect, not
  Golden Leaf Company in Nelspruit and                                                                                         Key Account units; Domestic Business Builder unit
                                               only on the workers employed at saw                                             and now our Export Division: Key Account unit
  Mokopane (in Limpopo province) to            millers, but also along the value chain
  close down. Over the last three years the                                                                                    – have achieved results above the 90% client satis-
                                               matrix, particularly downstream activities
  volume of tobacco handled had decreased                                                                                      faction level.                                           11
                                               of timber in the manufacturing sector.
  from 18 million kg to 4,6 million kg this
  year. The company needs to process 5         One of the main barriers to the growth                                          We pride ourselves on the service levels we are able
  million kg of tobacco for it to be viable.   of the Maputo corridor is the acute                                             to consistently deliver to you, our clients, but you
                                               inadequacy in capacities to co-ordinate
  Struggling paper makers Sappi and Mondi                                                                                      can also be assured that we never, ever rest on our
                                               strategies and activities of the corridor.
  are also challenging government’s decision                                                                                   laurels and are always striving to improve on the
                                               This has resulted in exporters utilising
  to scrap the 5% duty on certain paper        Richard’s Bay in Kwazulu-Natal rather                                           already unsurpassed standards.
  imports. This could adversely affect these   than the potentially more cost-effective
  companies as they try to compete with        Maputo harbour.                                                                 *Independent research conducted by
                                                                                                                               Kaufman Levine Associates cc (KLA)

                                                               No 108 – November 2006

     Credit Guarantee’s guide to
     CENTRAL & LATIN AMERICA                                                                                               October 2006
     Notes: Cover = Credit Guarantee cover. Y = Cover available. CBC = Case by case. N = No cover available under
     normal circumstances or if there is no request for cover. SC = Special conditions. ILC = Irrevocable letter of credit.
     CILC = Confirmed irrevocable letter of credit. All medium-term transfers will be individually underwritten based on the
     specific nature and structure of the transaction.

     COUNTRY                  COMMENT                                                                                                       SHORT-
     Govt type/Population/                                                                                                                  TERM
     2005 Pop. growth rate                                                                                                                   COVER

      Argentina                Since May 2003, Argentina has been ruled by Nestor Kirchner. The country will hold its next election
                               in 2007. The economy benefits from an export-oriented agricultural sector and a diversified industrial

      Republic                 base. Economic problems over the past decade included inflation, external debt, capital flight and
      Population: 40m.         budget deficits. The economy began its recovery during the second half of 2002 with GDP growth of
      Pop. growth: 0,96%       9% between 2003 and 2005 due to strong domestic demand, surging exports and favourable exter-
                               nal conditions. Argentina’s public and private debt fell 6,7% to $106,8bn in the first half of 2006.
                               Until early 2005, global debt, in default since 2001, exceeded $140bn. Argentina is currently negoti-
                               ating increased future gas supplies from Bolivia, hoping to get increased fuel delivery from 2007.

                               President Luiz Inaçio Lula da Silva has been in power since January 2003 and was re-elected by a                Y
      Brazil                   comfortable majority in the 2006 presidential election. The largest economy on the continent is
                               characterised by large well-developed agricultural, mining, manufacturing and service sectors.
      Federal republic.        Its economic strength lies in its floating exchange rate, an inflation-targeting regime and a tight fiscal
      Population: 188m.        policy. Its biggest weakness is government’s large domestic debt. GDP was $620 trillion in 2005 and
      Pop. growth: 1,04%       GDP growth was 2,4%. External debt totaled $188bn in 2005. The president is optimistic over the
                               economy and predicts GDP growth of 7% in the future.

                               President Michelle Bachelet Jeria has been chief of state since March 2006. The next election is due in
      Chile                    December 2009 in this open market-oriented economy. Economic growth shrunk in 2001 and 2002                     Y
                               due to the Argentinean peso crisis but recovered from 2003 and GDP growth accelerated to 6,1% in
      Republic.                2004-05 benefiting from high copper prices, solid exports and increased foreign direct investments.
      Population: 16m.         Unemployment remains very high. Record copper prices have strengthened the peso and will boost
      Pop. growth: 0,94%       GDP growth in 2006. GDP was $115,6bn in 2005 and external debt totalled $47,5bn.

                               The Colombian government has recently increased efforts to reassert its control throughout the coun-
      Colombia                 try and now has a presence in each of its municipalities. Chief of state since August 2002 is president        ILC
                               Alvaro Uribe Velex. The next election is due in May 2010. The agreement between government and
      Republic – executive
                               the Revolutionary Armed Forces (FARC) to sign a humanitarian accord has boosted expectations in
      branch dominates govt    the first step towards peace. The economy has improved due to government’s focus on reducing
      structure.               public debt levels, expanding export-oriented growth strategy and an improved security situation in
      Population: 43m.         the country. Reforming the pension system and reducing high unemployment remain difficult chal-
      Pop. growth: 1,46%       lenges. Coffee prices have recovered from lows as the industry pursues greater market shares in
                               developed countries like the US. GDP was $97,7bn in 2005 and GDP growth was 5,1% with foreign
                               debt totaling $32,4bn.

12                             President Fidel Castro Ruz has been in power since 1959. The next election is due in 2008. Cuba is
      Cuba                     slowly recovering from the severe economic recession of 1990, following the withdrawal of former                N
                               Soviet subsidies worth $4bn to $6bn annually. The US embargo on Cuba cost it $4bn in 2005
      Communist state.
                               – double that of 2004, as tougher US rules took a bigger bite of the island’s recovering economy.
      Population: 11m.
                               Government strengthened its control over dollars entering the economy through tourism, remittances
      Pop. growth: 0,31%
                               and trade in 2005. External financing has helped growth in the mining, oil, construction and tourism
                               sectors. GDP growth was 8% in 2005.

     No 108 – November 2006
Dominican                  Former President Leonel Fernandez Reyna won elections to a second term in 2004 following the               CBC
                           constitutional amendment allowing presidents to serve more than one term. The next election will
Republic                   be held in 2008. Dominican Republic is an exporter of sugar, coffee and tobacco. Recent increases in
                           tourism and free trade zones have led to the services sector becoming the backbone of the economy.
                           The economy recovered from negative growth in 2003 due to strict fiscal targets and a renegotia-
                           tion of an IMF standby loan in 2004. In 2005, GDP was $18,15bn and GDP growth was 9,3% with
Population: 9m.
                           external debt amounting to $7bn. Offshore remittances from 1995 to 2005 totalled $17,8bn.
Pop. growth: 1,47%
                           President Alfredo Palaçio has been in power since April 2005. The former president Luçio Gutierrez         CILC
Ecuador                    was removed from office by congress last year. The next election is due in October 2006. Ecuador
Republic.                  has substantial petroleum resources which accounts for a third of government revenue. Dollarisation
Population: 13,6m.         stabilised the economy after its economic collapse in 1999 and growth returned to its pre-crisis levels
Pop. growth: 1,5%          by 2003. The government under president Palaçio reversed economic reforms that reduced the coun-
                           try’s vulnerability to petroleum price swings and financial crisis, allowing government greater access
                           to oil windfalls and disbursing surplus retirement funds. In 2005 GDP was $30,7bn and GDP growth
                           was 3,9%. Chancellor Carrion recently rejected the IMF’s threats against the country and confirmed
                           his government is a sovereign to act in agreement with its interests. The IMF urged Ecuador to accu-
                           mulate reserves in order to face emergency expenses.

                           President-elect Felipe Calderon won elections in July 2006. The next election is due in 2012. The           Y
Mexico                     president is expected to face a stagnant economy in 2007 when the economy is said to grow by
                           3,8%, contrary to what outgoing president Fox asserted about leaving the economy in good shape.
Federal republic.
                           The economy is made up of modern and outmoded industry and agriculture, increasingly domi-
Population: 107m.
                           nated by the private sector. Additional challenges facing the new government are boosting economic
Pop. growth:1,2%           growth, improving Mexico’s international competitiveness and reducing poverty. Trade with the US
                           and Canada has tripled since the implementation of Nafta in 1994. In 2005 GDP was $693bn and
                           GDP growth was 3% while external debt stood at $137bn.

                           President Nicanor Duarte Frutos has been chief of state since August 2003. The next election is due         Y
Paraguay                   in 2008. Paraguay has a market economy marked by a large informal sector. A large percentage of
Constitutional republic.   the population derives its living from agricultural activity. The country’s poor economic performance
Population: 6,5m.          is attributed to its political uncertainty, corruption, lack of progress on structural reform and sub-
                           stantial internal and external debt. GDP was $7,2bn in 2005, GDP growth was 2,7% and external
Pop. growth: 2,5%
                           debt was $3,5bn.

                           President Alan Garçia Perez was elected in July 2006 and the next election will be held in 2011.            Y
Peru                       Peru’s coastal waters provide good fishing grounds and its mountainous areas provide abundant min-
                           eral resources, which the country relies too heavily on. The economy grew over 4% between 2002-
Constitutional republic.
                           05, backed by a stable exchange rate and low inflation. Growth will be driven by the Camisea natural
Population: 28m.
                           gas megaproject and exports of minerals, agriculture and textiles. In 2005, GDP was $69,8bn and
Pop. growth: 1,32%         GDP growth was 6,7% with external debt amounting to $30,9bn.

                           President Tabare Vazquez Rosas has been chief of state since March 2005. The next election is due           Y
Uruguay                    in October 2009. Uruguay has a thriving economy characterised by an export-oriented agricultural
                           sector and a well-educated work force. Cooperation with the IMF helped contain the damages of
                           the spillover of the economic problems of Argentina and Brazil. A debt-swap with private creditors
republic.                  in 2003 extended the maturity dates on nearly half of Uruguay’s $11,3bn public debt and helped
Population: 3,4m.          restore public confidence. The economy grew 10% in 2004 and 6,5% in 2005. GDP was $13,2bn in
Pop. growth: 0,46%         2005.

                           President Hugo Chavez Frias has been in power since 1999. The next election is due in December              N
Venezuela                  2006. This economy is highly dependent on its petroleum sector which accounts for more than half
                           of government’s operating revenues. Tax is the primary source of non-oil revenue, accounting for
Federal republic.
                           53% of the 2006 budget. High oil prices boosted output recovery in 2004-05. The country remains
Population: 26m.                                                                                                                                13
                           an important source of crude oil to the US market. Government’s international agenda has oil as the
Pop. growth: 1,38%         backbone of its strategy. The recent visit of President Chavez to China paved the way to sell 200 000
                           bpd of crude oil to the Asian giant. China will participate in the construction of ships for Venezuela
                           – a key element of the oil policy. Venezuela will be able to move up to 50% of domestic oil produc-
                           tion with national ships by 2012. In 2005 GDP was $106bn, GDP growth was 9,3% and external
                           debt was at $41bn.

         Researched and compiled by Lily Moodley, senior economic researcher: Credit Guarantee                         October 2006

                                                                                                                       No 108 – November 2006
     NOVEMBER 2006

     2010 hopes and Christmas sales expectations
           he allocation by finance minister Manuel          Government finances                                        Sales roar on
           of additional funds towards infrastruc-
                                                             There is no doubt that the health of SA Inc as             As is evident from the table below, the entire
           ture and services aimed at ensuring a             reflected in the 2006 MTBPS is very sound. Cer-            chain from the factory right through to retailers are
     successful Soccer World Cup is to be wel-               tainly the lament that a budget surplus of 0,5% of         enjoying the fruits of the consumer boom. Manu-
     comed. However, we believe that we should               GDP expected in 2007/8 reflects a lack of institu-         facturing sales have benefited from the weaker
     focus more on ensuring that we do not suffer            tional capacity to deliver on the ground, has merits.      exchange rate and rebounded strongly in the first
     a hangover post-2010. Expectations of another           The total tax take by the fiscus continues to esca-        eight months of this year, recording nominal growth
     plenteous Christmas sales outcome also need             late, indicating government’s pervasive and ever           of 10,8% versus the 6,2% seen in calendar 2005.
                                                             increasing foothold in the economy. From an esti-          Similarly, the physical volume of production has
     to be juxtaposed against excessive credit
                                                             mated 26,3% of GDP in 2006/7, total tax revenues           risen 4,6% in the first eight months of 2006 after
     extension and escalating debt levels while              are forecast to rise even further to 28,2% of GDP in       increasing by 3,5% last year.
     service delivery, skills shortages, rampant             the next tax year. This reflects in part the desire to
     crime and graft all continue to bedevil our                                                                        Corroboration of the fact that manufacturers are
                                                             attain the ‘progressive realisation of social goals’.
                                                                                                                        improving their relative performance is provided
     future prospects.
                                                                                                                        by the Investec/BER Purchasing Managers Index,
     2010 beckons                                                                                                       which bounced back in October to record 59 from
                                                                           Compiled by                                  56,3 in September (seasonally adjusted). Specifi-
     Massive amounts of preparation, finances and                                                                       cally a jump in new sales orders indicates greater
     effort is currently being expended on transport                    LUKE DOIG                                       market share of domestic producers due to cur-
     infrastructure as we enter three years of what will              Senior economist,                                 rency depreciation. This is also reflected in the utili-
     need to be frantic activity. There is however a lurk-            Credit Guarantee                                  sation of production capacity that touched 85,8%
     ing danger herein, in that in this hectic period, we                                                               in May 2006 from 84,8% a year earlier. Wholesale
     will do no planning for the vast challenges that will                                                              sales have also benefited, rising 14,9% in nominal
     face us in 2011 and beyond. 2010 should be used                                                                    and 7,4% in real terms in the first eight months of
     as a base for bigger and better things ten years                                                                   2006.
     from now.
                                                                                                                        Financial health
     As with the 2002 World Summit on Sustainable
     Development, such events are the justification for                                                                 To date the cumulative 150bpts rise in prime is yet
     improving all sorts of amenities. But do taxpayers                                                                 to make an impact on sequestration data. Personal
     and indeed all constituents not require that policy                                                                insolvencies in the first eight months of 2006
     makers plan for their needs at all times and on an                                                                 are 15,1% lower than the same period last year
     ongoing basis? The fact that the Department of                                                                     while the situation for company liquidations in the
     Transport in its 2010 action plans now estimates                                                                   January-September 2006 period reflects a 13%
     that an additional R5bn p.a. is required to arrest                                                                 improvement. The only indication of deteriorating
     the current decline in the public transport system                                                                 corporate health lies in the civil debt arena, with
     over the next 10-15 years is tacit evidence hereof.                                                                both the value and number of default judgments
     We need to sustain the country beyond 2010 and          The minister has emphasised in the past the fact           against businesses up 36,7% and 45,4% respec-
     think even bigger than the World Cup because that       that social grants cannot be recklessly raised as          tively in the first eight months of 2006 compared
     may well determine the future of the country. As        one cannot be assured of continuing strong rev-            to the same period last year. The corresponding
     KPMG puts it, the event is just the catalyst and we     enues; similarly he played down the likelihood of          figures for judgments against private persons show
     require a strategy beyond 2010 to capitalise on the     personal tax breaks next year despite the tax rev-         a 5,1% decline in value terms and a 7,5% fall in
     momentum.                                               enue overruns. But this may also be a PR exercise          numbers. Certainly our discernment of the situa-
                                                             ahead of the spending season. We would certainly           tion is that the impact of higher rates may only be
     The Airports Company of South Africa intends            expect a degree of personal income tax relief in the       visible some 12 months later. Hence we believe
     spending R5,2bn upgrading airports in addition to       new year, if only to take account for inflation. For       watchfulness must be the order of the day when it
     the existing R3,5bn expansion programme while           the balance, we would strongly suggest targeted            comes to payment collections in early 2007.
     the medium-term budget policy statement (MTBPS)         incentives for savings and retirement provision and
     allocated R8,4bn to stadiums and R6,7bn to public       sizeable ones at that, not nominal adjustments.
     transport initiatives and supporting infrastruture
                                                                                                                                                           To page 16       ☛
     in respect of 2010. This will be supplemented by
14   funds from local government and other partners.
                                                               % change                                                2004              2005            YTD Aug 2006
     Our first concern relates to whether the building
     of five new stadiums is viable; our second to the         Physical volume of production                          4,4%               3,5%                        4,6%
     wherewithal of the construction and civil engineer-       Manufacturing sales – nominal                          8,8%               6,2%                      10,8%
     ing sectors to deliver on time given the extremely        Wholesale sales          – nominal                     15,7%              6,5%                      14,4%
     tight schedules; and finally, whether we will
                                                                                        – real                        13,9%              3,0%                        7,4%
     ultimately have the infrastructure to deal with an
     expected 400 000 visitors. All of this needs to be        Retail sales             – nominal                     13,1%            10,2%                       15,2%
     weighed against the additional spending of around                                  – real                        9,7%               6,7%                        9,4%
     R10bn by visitors (less than 0,75% of GDP).               Source: Statistics SA

     No 108 – November 2006
                                                                                                                                                                 2002      2003         2004      2005    JULY'05       AUG       SEPT        OCT        NOV        DEC       JAN'06       FEB      MAR        APR       MAY      JUNE      JULY       AUG      SEPT       OCT
                                                                                                              Gross Domestic Product (%)                           3,7       3,0          4,5       4,3                             4,1                              3,2                              4,0                           4,9
                                                                                                              (seasonally adjusted annualised rate)
                                                                                                              BER manuf business conf index                       63,8      49,0         62,7      65,0                            68,0                             68,0                             72,0
                                                                                                              Std Bank/Sacob trade managers index:
                                                                                                              – Actual (SATAI)                                    54,1      50,0         50,6      49,9      47,2       50,0       51,3       50,5       55,0       49,4         47,0      50,2      55,9      52,4      59,2      56,4      53,6      56,0      54,4
                                                                                                              – SATEI - Expectations Index                        55,8      55,8         60,4      61,8      62,0       60,0       60,0       58,0       60,0       66,0         68,0      67,0      66,0      70,0      70,0      67,0      68,0      68,0      65,0
                                                                                                              BER/ Investec purchasg mngrs index                 56,10     49,40        55,60      54,7      54,8       55,8       58,9       57,4       58,3       56,5         44,0      48,0      51,1      50,9      55,3      56,9      57,7      59,2      60,5      62,4
                                                                                                              Sacob bus conf index (1995=100)                    104,1     110,1        124,7     127,1     129,0      126,1      125,9      126,0      126,5      129,4        131,0     100,1     100,9     103,1     101,4      99,4      99,1      99,0      97,7      99,5
                                                                                                              Producer prices (%)                                 14,2       1,7          0,7       3,1       3,6        4,2        4,6        4,2        4,5        5,1          5,5       5,5       5,4       5,5       5,9       7,5       8,1       9,2       9,0
                                                                                                              Consumer prices (%)                                  9,2       5,9          1,4       3,4       3,4        3,9        4,4        4,0        3,4        3,6          4,0       3,9       3,4       3,3       3,9       4,9       5,0       5,4       5,3
                                                                                                              CPIX (%)                                             9,3       6,8          4,3       3,9       4,2        4,8        4,7        4,4        3,7        4,0          4,3       4,5       3,8       3,7       4,1       4,8       4,9       5,0       5,1
                                                                                                              MONEY SUPPLY:
                                                                                                              M3 - Revised (%)                                   20,38     13,09        13,10      16,2     19,86      19,00      16,85      15,92      16,44      19,92        19,80     21,12     26,83     23,02     24,20     23,03     21,15     21,35     21,93
                                                                                                              Credit extension to the private sector (%)         11,26     17,54         8,70      20,1     23,66      21,96      22,81      19,30      19,30      20,09        20,94     21,89     24,89     24,36     23,91     25,08     26,36     26,33     26,30
                                                                                                              INTEREST RATES (MONEY MARKET):
                                                                                                              BA rate - 3 months (%)                             11,59     10,90         7,60      7,04      6,87       6,88       6,87       6,91       7,06       6,96         6,91      6,96      6,96      6,96      6,96      7,25      7,48      7,95      8,11      8,46
                                                                                                              NCD's - 3 months (%)                               11,92     11,19         7,76      7,16      6,98       7,00       6,97       7,04       7,18       7,08         7,03      7,08      7,10      7,09      7,08      7,37      7,64      8,13      8,28      8,66
                                                                                                              Prime (%)                                          15,58     15,17        11,27     10,65     10,50      10,50      10,50      10,50      10,50      10,50        10,50     10,50     10,50     10,50     10,50     10,88     11,00     11,50     11,50     11,81
                                                                                                              Bank/Repo rate (%)                                 12,10     11,66         7,77      7,15      7,00       7,00       7,00       7,00       7,00       7,00         7,00      7,00      7,00      7,00      7,00      7,38      7,50      8,00      8,00      8,31
                                                                                                              EXCHANGE RATES:
                                                                                                              Rand/USA Dollar (R:$1)                             10,51      7,56         6,42      6,36      6,71       6,47       6,36       6,58       6,65       6,36         6,09      6,12      6,25      6,07      6,32      6,95      7,08      6,96      7,14      7,65
                                                                                                              Nominal eff exchange rate (2000 = 100)             66,54     83,24        90,84      91,9     89,21      91,02      92,59      91,04      91,28      95,13        97,77     98,34     96,02     97,73     90,76     83,21     81,74     82,58     77,86     75,92
                                                                                                              Rand/Euro (R: 1)                                    9,90      8,53         8,01      7,91      8,07       7,95       7,79       7,91       7,86       7,54         7,38      7,31      7,52      7,45      8,07      8,82      8,99      8,92      9,44      9,65
                                                                                                              INTERNATIONAL RESERVES (EoP):
                                                                                                              Gold reserves (Rbn)                               14 990     9 799        8 887    12 970    11 343     11 211     12 007     12 593     12 781     12 970       13 880    13 710    14 505    15 693    17 392    17 345    17 437    17 629    18 629    17 908
                                                                                                              Foreign exchange reserves (Rbn)                   50 987    43 106     73 962     117 495   113 575    111 999    112 094    119 100    116 368    117 495      121 058   124 781   127 848   129 930   142 455   154 199   148 504   156 045   172 590   164 793
                                                                                                              Total reserves (Rbn)                              65 977    52 905     82 849     130 465   124 918    123 210    124 101    131 693    129 149    130 465      134 938   138 491   142 353   145 623   159 847   171 544   165 941   173 674   191 219   182 701
                                                                                                              Import cover (months)                                2,4       0,2          0,3       0,4       4,3        3,9        3,8        4,2        3,8        5,1          4,6       4,6       4,3       5,0       4,2       4,3       3,9       4,2       5,1
                                                                                                              EXTERNAL TRADE:
                                                                                                              Exports (Rm)                                  312 090      275 053    245 954     329 944    28 027     28 736     29 271     26 001     30 407     29 560       21 543    26 483    29 929    26 513    30 671    35 489    34 850    35 864    37 592
                                                                                                              Imports (Rm)                                  272 595      256 812    255 006     349 217    29 387     31 979     33 024     31 545     33 561     25 741       29 281    30 398    32 750    28 931    37 645    39 725    42 596    41 215    37 767
                                                                                                              Trade balance (Rm)                                39 285    18 241     -9 052     -19 273    -1 360     -3 243     -3 753     -5 544     -3 154      3 819       -7 738    -3 915    -2 821    -2 418    -6 974    -4 236    -7 746    -5 351     -175
                                                                                                              CIVIL DEBT (BUSINESS ENTERPRISES):
                                                                                                              Number of default & consent judgements            53 545    56 010     52 858      52 403     3 846      4 022      4 284      5 209      4 763      4 678        4 597     5 907     5 638     4 864     4 815     5 231     6 822     6 010
                                                                                                              Value: def & cons judgements (Rm)            1 167 928     873 424   1 025 065    959 843    61 661     76 392     88 708    118 477    107 909    152 597      105 734   121 503   114 692    92 214    87 131   118 767   132 439    89 464
                                                                                                              INSOLVENCIES (INDIVIDUALS & PARTNERSHIPS):
                                                                                                              Number of cases *                                  3 042     2 637        1 944     1 558       119        168        137        120        151        119          89       128       150        87       119        99       101      150p
                                                                                                              LIQUIDATIONS (COMPANIES & CC'S):
                                                                                                              Number of cases                                    3 911     4 086        2 965     3 225       318        273        297        234        234        196         171       213       241       198       311       262       261       333       238
                                                                                                              Industry : Agric hunting forestry fishing            37        62           51        34          1          4          3          5          3             1        2         3         3         2         5          -        1         3         4
                                                                                                                      : Mining & quarrying                         77        43           28        23          6          -          3          -          1             3         -        2         7         1         2         3         1         4          -

                                                                                                                      : Manufacturing                             329       320          237       192         22         14         16         19         13         14          15        12        11        17        19        21        13        11        17
                                                                                                                      : Electricity gas & water                     7        10            4        13          2          3          1          1          5             1         -        3          -         -         -        2         1          -        1
                                                                                                                      : Construction                              362       315          220       249         21         20         20         21         21             7       11        12        22        12        30        24        22        24        12
                                                                                                                      : Wholesale & retail trade                 1 193     1 276         983      1 037       106        100         88         64         84         54          47        73        71        65        99        74        82       136        74
                                                                                                                      : Transport storage & comm,                 177       136          118       122         14         14         10         17          9             1        7        15        11         9        15         6        13        15         5
                                                                                                                      : Finance insurance & real est             1 535     1 520        1 058     1 167       109        104        126         82         79         88          68        68        99        75       119       105       105       122       110
                                                                                                                      : Community & other services                138       404          266       388         37         14         30         25         19         27          21        25        17        17        22        27        23        18        15
                                                                                                                                                                                                                                                                                                                                                                                  SUMMARY OF ECONOMIC INDICATORS UP TO OCT 2006

                                                                                                              PASSENGER CAR SALES:
                                                                                                              New car sales                                 231 602      247 260    301 151     376 894    30 933     35 742     36 472     33 338     34 082     31 135       34 278    32 453    37 496    30 827    35 045    38 115    37 366    39 203    37 775    37 311

Compiled by Lily Moodley senior economic researcher Credit Guarantee – Tel: 011 889 7573108 – November 2006
                                                                                                              * Figures indicated with (p) = preliminary figures; EoP = end of period              Sources : SA Reserve Bank Statistics South Africa Sacob Naamsa & BER


     Excellence in export rewarded
                                                                                                                             Being such an integral part of the export
                                                                                                                             landscape, it would almost seem to be logi-
                                                                                                                             cal that Credit Guarantee should be one
                                                                                                                             of the co-sponsors of both the Cape and
                                                                                                                             Gauteng Exporter of the Year Awards.
                                                                                                                             The Gauteng event is held under the aus-
                                                                                                                             pices of Nafcoc JCCI and is the showcase
                                                                                                                             for Gauteng exporters intent on lifting their
                                                                                                                             local as well as international profile.
                                                                                                                             Credit Guarantee is proud to be the spon-
                                                                                                                             sor of the Export Services Award, which
                                                                                                                             this year was won by Network Health Care
                                                                                                                             Holdings (Netcare), who also walked away
                                                                                                                             with the overall Gauteng Exporter of the
                                                                                                                             Year Award.
                                                                                                                             At the Western Cape event, hosted by the
                                                                                                                             Cape Town Regional Chamber of Commerce
                                                                                                                             & Industry, Credit Guarantee sponsors the
                                                                                                                             Smaller Exporter Award which was won this
                                                                                                                             year by Streetwires. The overall Exporter
                                                                                                                             of the Year in Cape Town was won by Invis-
                                                                                                                             ible Card Company. Congratulations both
                                                                                                                             These winners, as well as other candidates
                                                                                                                             for the awards, fly the flag of South African
     Italia Bonninelli, group HR director of Netcare, receives the Export Services Award from                                exports proudly.
     Roger Munitich, Credit Guarantee general manager: Marketing and R&D.

                                                              in 2007 – as well as imported inflation pressures          (November and December). One view holds that
     ☛    From page 14                                        induce us to see the SA Reserve Bank raising the           a slowdown in spending is already evident, with
                                                              repo rate by 50bpts at both the December 2006              further interest rate hikes set to restrain consumers
     Rates to ratchet higher                                  and February 2007 MPC meetings respectively,               even more. We would argue that there is little con-
     Money supply and credit aggregates have been con-        ultimately implying prime of 13%. Unfortunately we         clusive evidence to support this, and that historical
     cerning the SARB for some time now. Money supply         feel the SARB missed an opportunity as far back as         consumer behaviour points to a normal spending
     (M3) expanded 16,2% last year and has expanded           October last year to start raising rates in order to       indulgence.
     by 22,5% in the period to September 2006. This           cool exuberance, which is why they will now need
                                                                                                                         With retailers going all out to procure sufficient
     brisk growth in M3 hit a peak of almost 27% in           to hike rates into next year. But with CPIX expected
                                                                                                                         inventories, the trade account should worsen once
     March, before declining to sub-22% in July–Septem-       to approach 5% by year-end 2007, a cut in the repo
                                                                                                                         again in October/November. We thus expect Christ-
     ber. Credit extended to the domestic private sector      rate in late 2007 could see prime back at 12,5% at
                                                                                                                         mas sales to improve by a minimum of 15,5% in
     expanded by 20,4% in 2005 and in the first nine          that stage. In short, prime of 13% would see debt-
                                                                                                                         current terms to c.R89,6bn. This implies an addi-
     months of this year has grown by 23,4%.                  servicing costs rising almost 24% from their recent
                                                                                                                         tional R12bn spending over last year’s levels and
                                                              lows and many individuals and business concerns
     Obviously mortgage advances have been at the                                                                        represents real growth of almost 10%. Our concerns
                                                              may struggle under such a burden.
     head of credit extension and will only react to rate                                                                relate to consumers being swamped by repayment
     increases with a lag given the time it takes to reg-     Christmas sales                                            obligations come the new year when other essential
     ister property transfers. A Standard Bank analysis of                                                               payments become due as well as potential non-pay-
                                                              Strong real improvements in disposable income              ment by buyers to suppliers.
     mortgage advances reveals the growth in those to
                                                              of 4%, 5,7% and 6,6% in the past three years
     individuals declining since the beginning of the year,
     whereas those to corporates have surged. Is this a
                                                              has fuelled the consumer boom. Wage and salary             Growth targets
                                                              increase higher than inflation also imply additional
     sign of distress borrowing by firms? Standard Bank                                                                  The ongoing resilience of the economy is a welcome
                                                              spending power for private households. We believe
     concludes that they foresee a more pronounced                                                                       surprise. However, we have warned against the
                                                              that the surge in unsolicited credit facilities and
     slowdown in household debt in future.                                                                               potential consequences of unbridled credit exten-
16                                                            cards over the past few months will fuel the ten-
                                                                                                                         sion, both at the individual and business concern
     We concur with Governor Mboweni that CPIX is set         dency for credit sales to increase at this time of the
                                                                                                                         level. Despite the monetary policy direction outlined
     to test the upper limits of the target guidelines late   year. Interest rates are set to rise further in the near
                                                                                                                         above, we remain cautiously optimistic that a soft
     this year/early 2007. However, after averaging 4,8%      term and we would caution against a credit splurge
                                                                                                                         landing will be engineered for both the global and
     this year from 3,9% in 2005, we expect an outcome        by consumers.
                                                                                                                         local economies. We originally foresaw domestic
     of 5,6% next year with a relative improvement in the
                                                              Year-to-date advances in retail sales of 15,2% and         output slowing to sub-4% next year from just above
     latter half of 2007. The SARB’s model however has
                                                              9,4% in nominal and real terms respectively, and           4% this year, but now expect a similar outcome to
     CPIX staying close to 6% until the end of 2007.
                                                              Retailers Liaison Committee retail sales figures           eventuate in 2007.
     The current trend in factory gate prices – PPI is seen   of 14,8% y-o-y in both August and September,
                                                                                                                                                            3 November 2006
     rising 7,5% this year and may remain above 7%            point towards a vigorous Christmas trading season

     No 108 – November 2006
                                                                                                situation it is important to distinguish

    Dealing with                                                                                the symptoms from the disease.
                                                                                                d. To whom and to what do you
                                                                                                give your loyalty as a person and a

    dilemmas in                                                                                 member of the corporation? The
                                                                                                people involved must have a strong
                                                                                                sense of integrity that puts loyalty to

    business ethics                                                                             ethical principles above personal gain.
                                                                                                e. What is your intention in making
                                                                                                this decision? The purity of a com-
                                                                                                pany’s intentions (purely for profit or
    Not every ethical dilemma has a "right" solution –                                          purely altruistic) will have wide-reaching
    reasonable people often disagree. In business, how-                                         effects inside and outside of the com-
    ever, it is essential that managers agree on a proc-
    ess for dealing with dilemmas and in settling any                                           f. How does this intention compare
                                                                                                with the probable result? The good-
    ethical question with which they are confronted.                                            ness of intent may melt away before
    CHRIS LEISEWITZ explains.                                                                   the final result. Responsible companies
                                                                                                must try to align intent and likely result
                                                                                                to show the probable consequences and
                                                                                                the limitation of knowledge that might
                                                                                                lead to more harm than good.

             ORAL DEBATE is about what                                                          g. Whom could your decision or
             ought to be, never about facts.                                                    action injure? The possibility of injury
             Disputes over facts are not                                                        is an even more important consideration
    settled by moral contemplations but by                                                      than potential benefit.
    checking the actual situation. However,
    due to different people having varying                                                      h. Can you discuss the problem
    opinions and feelings and because it is                                                     with the affected parties before you
    not always easy to tell which views are                                                     make your decision? Consultation and
    right, there will always be differences                                                     a participative decision-making process
    about what ought to be. Where there                                                         can resolve many potential conflicts.
    are competing values and when two
                                                                                                i. Are you confident that your posi-
    different courses of action both seem
                                                                                                tion will be as valid over a long
    right and a decision has to be made as
                                                                                                period of time as it seems now?
    to which should prevail, it is natural that
                                                                                                A difference in time frame can totally
    there can be conflicting moral claims in
                                                                                                change the meaning of a problem.
    a debate over ethical issues.
                                                                                                j. Could you disclose without qualm
    Because businesses and their stakehold-
                                                                                                your decision or action to your boss,
    ers are interdependent, for the company
                                                                                                your CEO, the board of directors,
    to be strong the stakeholders need to
                                                                                                your family, society as a whole?
    share a common idea of correct behav-
                                                     Chris Leisewitz is a former                Would you want your decision or
    iour, a business ethic, and to think of it
                                                     managing director and CEO of               action to appear on the front page
    as a positive force for better decision-
                                                     Credit Guarantee.                          of the morning newspaper?
    making, not a constraint in settling dif-
    ferences. Such shared values and agreed                                                     k. What is the symbolic potential of
    processes are at the centre of ethical        assist in finding a solution to the ethical   your action if understood? If misun-
    issues.                                       problem or dilemma:                           derstood? How the symbol is actually
                                                                                                perceived is as important as how your
    In this article we will consider the proc-    a. Have you defined the problem               intend it to be perceived.
    esses that can be employed to clarify         accurately? A moral decision is an
    and help settle an ethical problem. The       informed decision, one based on factual       l. Under what conditions would you
    next issue of Credit Notes will deal with     neutrality, defused of emotion.               allow exceptions to your stand?
    the values.                                                                                 What conflicting principles, circum-         17
                                                  b. How would you define the prob-             stances, or time constraints would
    Laura L Nash, in her essay "Ethics with-      lem if you stood on the other side            provide a morally acceptable basis
    out the Sermon”, suggests a practical,        of the fence? The purpose of such             for making an exception to one’s
    business-orientated way for managers to       an investigation is to differentiate the      normal institutional ethos?
    confront ethical problems. She recom-         purely expedient from the most respon-
    mends that managers try to answer the         sible action.                                 These questions help to show the
    following 12 questions about the issue                                                      responsibilities involved in the process
    under discussion. The answers should          c. How did this situation occur in the        of solving a moral problem and clarify
                                                  first place? In deciding the ethics of a      the issues involved and so help finding

                                                                                                              No 108 – November 2006
              an answer to the particular problem.         have been removed. The only thing of          RIMS method?), but it can be a valuable
              As Nash says: “The good corporation is       force is the most rational argument.          tool if participants in a dialog accept the
              expected to avoid perpetrating irretriev-                                                  rules – at least it can provide a measure
                                                           Habermas sets the following basic rules
              able social injury (and to assume the                                                      to gauge the correctness of the collective
                                                           that need to be complied with in the
              costs when it unintentionally does injury)                                                 action.
                                                           “ideal speech situation” for the formula-
              while focusing on its purpose as a profit-
                                                           tion of moral knowledge:                      The ethic of dialog (employing the RIMS
              making organization. Its moral capacity
                                                                                                         rules) can be seen as underpinning
              does not extend, however, to determine       • The only evidence that participants
                                                                                                         Kant’s categorical imperative. The co-
              by itself what will improve the general        may introduce into the discourse is
                                                                                                         operative discourse of a group to argue
              social welfare”.                               empirical experience which is objec-
                                                                                                         through a problem provides understand-
                                                             tively accessible. (Facts only).
              Rushworth M Kidder in his book “How                                                        ing and is a democratic way of finding
              Good People Make Tough Choices” rec-         • The process of communicative interac-       and agreeing answers and institutions.
              ommends that one can often categorise          tion is driven only by the force of the
                                                                                                         John Rawls developed his “veil-of-igno-
              a dilemma into one of the following four       strongest rational argument. (Ex-
                                                                                                         rance” as a tool to advance fairer condi-
              paradigms:                                     cluding personal inclination and
                                                                                                         tions for co-operation – to achieve fair
                                                                                                         choices of principles of justice. Michael
                                                                                                         Pendlebury suggests “that we often do
     The co-operative discourse of a group to argue through a problem                                    better to apply the veil-of-ignorance
                                                                                                         test repeatedly, flexibly and directly to
     provides understanding and is a democratic way of finding and                                       specific issues that concern us – doing
     agreeing answers and institutions.                                                                  this with a minimum of standing norma-
                                                                                                         tive (what ought to be) commitments,
                                                                                                         and assuming ignorance in the relevant
              • Justice versus mercy: fairness,            • Only those experiences, arguments,          parties only with respect to informa-
                equity, and evenhanded application of        and norms that can attain consensual        tion that might prejudice their decisions
                the law often conflicts with compas-         agreement are regarded as knowl-            (e.g., information about who they are in
                sion, empathy, and love.                     edge. (Universalisation within the          the corresponding real-world bargaining
                                                             group).                                     situation)”.
              • Short-term versus long-term: now
                versus then, reflects the difficulties     • Any knowledge formulation in this           The thoughts of Nash, Habermas, Rawls,
                arising when immediate needs or              way is always open to future revision.      and Pendlebury all provide suggestions
                desires run counter to future goals or       (Openness to re-examination).               as to the process that could be employed
                prospects.                                                                               to find answers to ethical questions and
                                                           Habermas accepts that his “ideal speech
                                                                                                         dilemmas in business. All are closely
              • Individual versus community: us            situation” is difficult to achieve in busi-
                                                                                                         related. Nash’s list of questions requires
                versus them, self versus others, or the    ness. However, if the people in an
                                                                                                         total objectivity – as advocated by RIMS,
                smaller versus the larger group.           organisation are serious about wishing
                                                                                                         and Rawls’s veil-of-ignorance. While
                                                           to find acceptable solutions to moral
              • Truth versus loyalty: honesty or                                                         it is of course most helpful to have a
                                                           problems or dilemmas faced by them,
                integrity versus commitment, respon-                                                     procedure that one can follow, it alone
                                                           then the participants in the discourse
                sibility, or promise-keeping.                                                            does not settle the question which of
                                                           should act as if they were equals.
                                                                                                         the diverse ethical theories one should
              Such an analysis helps describe the basic
                                                           RIMS or the discourse ethic is often          lean on when contemplating a moral
              issues, the conflicting basic values that
                                                           seen as utopian (could one expect that        problem.
              make it difficult to make the tough deci-
                                                           an employers' organisation and a union
              sion. Such an analysis can help in finding                                                 This question will be addressed in our
                                                           in wage negotiations would employ the
              a solution to the dilemma by having                                                        February 2007 issue.
              thought through the problem and the
              applicable ethical theory and by having
              tried to apply the relevant theory to it.        Develop your capacity to reason
                                                               The Applied Ethics for Professionals (AEP) Programme offered by
              Most rational argument
                                                               the Wits Philosophy Department is currently accepting applications from
              Jürgen Habermas, a contemporary                  experienced and well-qualified professionals, executives and leaders in all
              German philosopher, developed a strat-           fields. Meeting on occasional Saturday mornings, the AEP Programme is
              egy for moral decision-making in busi-           designed to accommodate the schedules of working professionals in the
18            ness, known as the “rational interaction         Gauteng area. The Programme is intellectually challenging and develops
              for moral sensitivity strategy” (RIMS).          participants’ capacity to reason critically, constructively and responsibly
              Here, Habermas focuses on the process            about a variety of significant ethical issues. It leads to a Postgraduate
              by which ethical decisions are made, not         Diploma (by course work) in 1½ years or a Master of Arts degree (by
              on the content of moral considerations.          course work and research report) in 2–2½ years. For more information
              He refers to the “ideal speech situation”        about topics, methods and courses of study, email the AEP Programme
              – the situation where all participants           Director, Dr Brian Penrose, at or call the Phi-
              in the discourse are truly equal and in          losophy Department at 011 717 4345.
              which all forms of coercion or force

     No 108 – November 2006

The following credit classifications were recently updated.
For more information on these and other countries please visit our website: or
contact our Export Department.

                     A F R I CA                                            How we rate them
                                                                           Country classifications are based on a numeric and alphabetic basis asso-
 DRC                                                    Rating: ZZ         ciated with each country, with the numeric indicator showing the political
The history of the Democratic Republic of Congo has been one of civil      rating of the country and the alphabet indicating the commercial risk.These
war. On 30 July this year, the DRC held its first multiparty elections     range from 1 to 3 on the political rating with 1 being your lowest risk and 3
since independence in 1960 and President Joseph Kabila won 45% of          the highest. Likewise the A, B and C are relevant to the commercial rating
the 17 milion votes cast in the poll and Jean-Pierre Bemba, a former       – A being the lowest risk and C the highest risk.
rebel leader, polled 20%. As the result was being awaited of a second      Usually the two ratings are closely linked because the political rating of a
round contest between Kabila and Bemba on 29 October this year, the        country will impact directly on its commercial rating.
country remained at risk of new or escalated violence.                     Factors taken into account when assigning ratings include the following:

                                                                           Political rating
 ETHIOPIA                                               Rating: 3C         Assessing political and economic conditions and stability:
The World Bank approved a 100% cancellation of Ethiopia’s debt to          • Environment
the International Development Association (IDA) early this year. The       • Economic policies
Bank also called for the resumption of aid to the country in a sign of     • Forex reserves – ability to generate
improved confidence since cutting direct aid last year. Venezuela has
                                                                           • Rule of law
expressed interest in working with Ethiopian investors, especially in
sharing with them its rich experiences of oil and gas exploration.         • Access to legal system
                                                                           • Banking and commercial infrastructure
                                                                           • Past history as trading
 EGYPT                                                 Rating: 2B             partner
                                                                           • Utilising various sources of information such as D & B, Moody's, S+P, var-
The Egyptian economy relies heavily on tourism, oil and gas exports           ious publications, Internet, Berne Union, ICIA, PASA, IMF, World Bank, etc
and Suez Canal revenues. This year Egypt suffered the worst outbreak
of avian flu outside Asia. The disease was largely brought under con-      • Negotiating country limits with reinsurers
trol although fears of a new outbreak still remain.                        • Country reports prepared by Credit Guarantee’s economic researchers
                                                                           • Credit Guarantee’s country underwriting committee.

 GABON                                                  Rating: 3C         Commercial rating
                                                                           Commercial ratings are based on the financial strength of buyers in a
Gabon is Africa’s fourth largest oil producer, pumping an estimated
                                                                           particular country as well as their ability to repay amounts within terms
250 000 barrels daily. Oil accounts for 45% of Gabon’s income and
80% of exports. The country’s oil reserves are expected to be depleted
within 30 years and Gabon is reported to be making progress in diver-      • Underwriting experience of other credit insurers on buyers in a particular
sifying its economy as shown by growth in the non-oil industries which        market.
accelerated to 4,5% in 2005, led by rising timber processing, manga-       • Number of insolvencies/
nese production and the services sector.                                      liquidations in a country.
                                                                           • Access to funds for buyers in the market.
                                                                           • Reliable credit information from the respective market.
 GAMBIA                                                 Rating: 3C         • Trade references within
According to the UN, although the recently held presidential election in      markets.                                                                     19
the Gambia was relatively free and fair, the tiny West African country     • Global and domestic industry trends and their impact on a market.
needs international support to help strengthen its democratic institu-
tions. President Yahya Jammeh, who has been in power since 1994,
was re-elected on September 22, after winning two-thirds of the vote.
The Gambia is reliant on exports of peanuts, tourism and foreign aid
to keep its economy afloat and the EIU states that improvements in                Compiled and researched by Sindiso Valerie Mpofu
agricultural production will keep GDP growth steady at 5% in 2006
and 2007.                                                                               Economic researcher, Credit Guarantee
                                                                                                    October 2006

                                                                                                                          No 108 – November 2006
                                                                                 opposition party) president, Michael Sata, who polled 29% of the
      GHANA                                                    Rating: 3C        vote, has urged parliamentary candidates who lost to put up a good
                                                                                 fight. The Zambian economy is being buoyed by the surge in copper
     Ghana’s economy is mainly rural, revolving around subsistence agri-
                                                                                 prices. The government is however pursuing an economic diversifica-
     culture. Cocoa, timber and pineapples are the main export crops, but
                                                                                 tion program to reduce the country’s reliance on the copper industry
     mining (mainly gold) has become the biggest source of foreign
                                                                                 by promoting agriculture, tourism, gemstone mining and hydropower.
     exchange. The government of Ghana is to raise about $2,7bn from
     domestic sources to help finance the $12,7bn Growth and Poverty
     Reduction Strategy (GPRS II) between 2006 and 2009. The country’s
     debt stock has been reduced from $6,3bn at the end of 2005 to
                                                                                                  AM ER ICA
     $1,9bn recently after the World Bank, IMF and African Development
     Bank cancelled Ghana’s debts.
                                                                                  USA                                                    Rating: 1A
      GUINEA                                                   Rating: 3C        President George W Bush’s approval ratings have suffered from a
                                                                                 series of setbacks on the home front. The next elections are due in
     President Lansana Conte has been head of this military government           November 2008. The US blames China’s lack of respect for intellectu-
     since 1984. The next election is scheduled for 2010, but the presi-         al property for costing the country thousands of jobs, robbing com-
     dent’s rapidly failing health may not allow him to remain in power to       panies of profits and seriously harming the US economy’s ability to
     the end of his term. The EIU anticipates that should he become com-         compete. Officials estimate that worldwide piracy and counterfeiting
     pletely incapacitated, the risk of a military coup is likely to increase.   costs the US industry $250bn annually and China accounted for 70%
                                                                                 of all pirated products seized at the US border last year.

      KENYA                                                    Rating: 3C
     President Mwai Kibaki has been chief of state since December 2002
                                                                                                           AS IA
     and the next election is due in December 2007. Most Kenyans lack
     faith in government’s commitment against corruption and prefer
     reporting graft-related cases to the police rather than the govern-          CHINA                                                  Rating: 2B
     ment’s anti-corruption commission. About 97% of Kenya’s exports to
     the EU are duty free and the country has exploited this preferential        China grew 9,9% in 2005 on the back of surging investment and
     market access in building horticultural exports to be its lead foreign      exports. The World Bank has raised its growth forecast for this year
     exchange earner.                                                            to 10,4% from its previous estimate of 9,5%. Government
                                                                                 announced a package of land management measures to strengthen
                                                                                 macroeconomic control and cool down the economy. China’s leaders
      MAURITIUS                                                Rating: 1B        have warned of the possible overheating and have emphasised the
                                                                                 tightening of land management and bank loans in the second half of
     Known for its stability, Mauritius has become one of the strongest          the year to rein in economic growth. The US is China’s largest export
     economies in Africa. Over the past two decades, real output growth          market and its second largest trade partner across the world.
     averaged about 6% a year, per capita income more than doubled and
     there has been a significant improvement in social indicators. Mauri-
     tius is shifting its focus to Southern Africa and SADC countries to          HONG KONG                                              Rating: 1A
     revive trade in its key textile sector that was affected by the 2005
     removal of export privileges into the US and EU.                            Following the resignation of Tung Chee-hwa who was elected to
                                                                                 serve a five-year term in March 2002, Donald Tsang was elected to
                                                                                 fill the remainder of Tung’s term until the next election scheduled for
      MADAGASCAR                                               Rating: 3C        June 2007. Hong Kong is popular for being the world’s famous
                                                                                 shoppers’ paradise and the bastion of low-tax, freewheeling capital-
     Madagascar will hold presidential elections on 3 December this year,        ism, but some fear that the credit-card swiping days will soon end as
     after the high court accepted a proposal by the government to have          Government plans to introduce a 5% tax on goods and services.
     the polls a few weeks earlier than previously scheduled. Agriculture
     including fishing and forestry is the mainstay of the economy. High
     oil prices and power cuts have hindered local business activity. The         JAPAN                                                  Rating: 1A
     government estimates that power cuts cost Madagascar 1,5% of GDP
     growth in 2005.                                                             In 2004 and 2005, growth improved and the lingering fears of defla-
                                                                                 tion have lessened. GDP growth was 3,2% in the fiscal 2005 and
                                                                                 The Economist predicts economic growth of 2%-3% between 2006
      SENEGAL                                                  Rating: ZZ        and 2007. The economy grew at a weaker-than-expected 0,8%
                                                                                 annual rate during the second quarter of 2006 as exports faltered
20   The legislative election which was supposed to be held in April 2006        (due to the slowing of the US market) but strong company invest-
     was postponed following the decision by the National Assembly to            ments sustained the expansion. Government’s debt of 170% of GDP
     extend the deputies' mandate until 2007. The legislative and presi-         and its aging population still remain major long-term problems.
     dential elections will take place at the same time in February 2007.

                                                                                  SINGAPORE                                              Rating: 1A
      ZAMBIA                                                   Rating: 3C        As the most export-dependent economy in Asia, Singapore’s prospects
     President Levy Mwanawasa won a second term in the 28 September              rely heavily on world market conditions, especially the global elec-
     elections, with 42% of the vote. Patriotic Front (which is the main         tronics cycle. Electronics make up about half of Singapore’s non-oil
                                                                                 domestic exports. The impact of the deceleration in world GDP

     No 108 – November 2006
growth on Singapore’s trade dependent economy will be partly offset       last year, has been partly financed by a rapid increase in credit, but
by continued healthy world trade growth, which is forecast to remain      the willingness of companies and households to borrow seems to be
at its 2005 rate of 7% during the next two years.                         diminishing. The Latvian government aspires to adopt the euro as
                                                                          the country’s currency on 1 January 2008, though this has been
                                                                          thrown into doubt recently and may not happen until 2009 or later,
 SRI LANKA                                              Rating: 3C        owing to high inflation.

The fighting between the army and Liberation Tigers of Tamil Eelam
remains a concern. In December 2005, Sri Lanka received its first
international credit rating with Fitch Ratings assigning it a BB- while
                                                                           POLAND                                                 Rating: 2B
S & P assigned it a B+. However the fighting has had some impact,         President Lech Kaczynski has been chief of state since December
with Fitch Ratings and S&P downgrading Sri Lanka’s outlook to nega-       2005 while head of government since July 2006 is prime minister
tive from stable in April. They warn an escalation in violence could      Jaroslaw Kaczynski. With the Kaczynski brothers in charge of Poland,
lead to full-scale civil war, curb growth and bleed the treasury.         their priority is to push ahead with the moral regeneration of the
Despite the tsunami’s devastating human cost, its economic impact         country including tough anti-corruption measures. There is a huge
was muted and the economy grew almost 5,7% in 2005. As part of            need for reform in the public administration such as tax collection.
its tsunami support to Sri Lanka the EU offered the general system
of preference (GSP+) from July 2006, covering over 7 200 products.
                                                                                  M IDDL E EAST
 TAIWAN                                                Rating: 1A
Chen Shu-bian from the Democratic Progressive Party (DPP) won a            IRAN                                                   Rating: 3C
second and final term in March 2004 by a margin of just 0,2%. He
has been beset by corruption allegations involving his family and this    Iran missed the August 31 deadline for its nuclear programme, set by
has prompted him to surrender some of his powers. Chen has vowed          the UN Security Council, but the country has said it would consider
to stay in office despite pressure on him to quit; his term expires in    temporarily suspending its program as a condition for beginning talks
2008. The island’s economy remains export-oriented, so it depends         with the US. Relatively high oil prices in recent years have enabled
on an open world trade regime and remains vulnerable to downturns         Iran to amass some $40bn in foreign exchange reserves but have not
in the world economy. China has overtaken the US to become Tai-           eased economic hardships such as high unemployment and inflation.
wan’s largest export market.                                              The country expects to attract billions of dollars of foreign invest-
                                                                          ment by creating a more favourable investment climate such as
                                                                          reduced restrictions and duties on imports, and free-trade zones. Iran
                  E U R A SI A                                            is the second largest Opec crude oil producer with around four mil-
                                                                          lion bpd and has the world’s second largest gas reserves after Russia.

 RUSSIA                                             Case-by-case           ISRAEL                                                 Rating: 2A
Russia is a leading producer and exporter of minerals, gold and all       Chief of state since July 2000 is president Moshe Katzav and the next
major fuels. The country’s coal and natural gas could be depleted in      presidential election is to be held in mid-2007. Despite limited natural
50 years, but with around 8% of the world’s uranium output, the           resources, Israel has intensively developed its agricultural and indus-
country is planning to mine 60-70% of its uranium needs by 2015.          trial sectors over the past 20 years. The country imports substantial
The Central Bank announced that as of September 2006, Russia had          quantities of grain but is largely self sufficient in other agricultural
the world’s fourth largest currency reserves (after China, Japan, and     products. The US is Israel’s largest trading partner and Israel the
Taiwan) at $260,4bn.                                                      19th largest export market for US goods.

                   EUROPE                                                  JORDAN                                               Rating: 2B*
                                                                          Jordan is a small country with limited natural resources and its major
                                                                          challenges include, reducing dependence on foreign grants, reducing
 CROATIA                                                Rating: 3C        the budget deficit, and creating investment incentives to promote job
                                                                          creation. Jordan has been working closely with the IMF for the past
Although Croatia was named as an EU candidate to join in 2007, the        three years, practising careful monetary policy and has made substan-
special co-ordinator of stability for Southeast Europe stated that it     tial headway towards privatisation. While pursuing economic reform
might not be ready to join in 2009. Economic growth of 4,3% for           and increased trade, the kingdom’s economy will continue to be vul-
2005 showed that the economy was experiencing robust expansion,           nerable to external shocks and regional unrest.
with investments being the main source of growth. Gross foreign           *ILC specified bank.
debt is predicted to increase from 82,4% of GDP in 2005 to 84,6%                                                                                     21
in 2006, and rising public and foreign debt stock implies greater
exposure to external economic events and international investor senti-
ment.                                                                      SAUDI ARABIA                                           Rating: 2B
                                                                          The petroleum sector drives this economy and GDP growth averaged
                                                                          6,5% in 2005 on the back of additional rises in oil production. The
 LATVIA                                                Rating: 2B         petroleum sector accounts for 90% of export earnings and this has
                                                                          prompted government to encourage private sector growth to lessen
President Vaira Vike-Freiberga was re-elected by parliament for a         the kingdom’s dependence on oil and increase employment opportuni-
second four-year term in 2003 and the next presidential election is       ties for the swelling Saudi population.
due by June 2007. Rapid economic growth, which reached 10,2%

                                                                                                                      No 108 – November 2006

     New challenges facing credit
     The new National Credit Act will place a huge administrative burden on
     suppliers to ensure that the end users do not over-extend themselves

                                     T    he new-era credit profes-
                                          sional has to fulfil one of
                                  the most vital functions of com-
                                                                        information. A central bureau
                                                                        which will be run by the Credit
                                                                        Regulator will be established to
                                                                                                           very well-trained and skilled
                                                                                                           credit controllers and that the
                                                                                                           profession needs to be market-
                                  panies, namely ensuring life-sus-     which credit managers will have    ed as a specialised career.
                                  taining cash flow and limiting,       access. However, in the mean-
                                                                                                           “As the economy grows, credit
                                  if not preventing, the effects of     time, it is extremely difficult.
                                                                                                           controllers are going to have
                                  bad debt and consequent loss
                                                                        "Furthermore, one's peers are      to be more proactive and the
                                  of stock.
                                                                        loath to provide a trade refer-    total concept of credit control
                                  “The responsibility facing credit     ence on a customer unless          will need to be viewed in a
                                  professionals has become more         written permission is given by     more serious light - hence the
                                  onerous with consumer protec-         the customer to request such       need for more skilled people in
                                  tion to be implemented in South       information on them.”              this field. This will lighten the
                                  Africa by the middle of next                                             burden of responsibility on the
                                                                        According to Norma Keevy,
                                  year,” says Credit Guarantee’s                                           credit manager,” she comments.
                                                                        credit manager of Multotec,
                                  Roger Munitich, general man-
                                                                        the group’s client base consists   Munitich says that in the light
                                  ager: Marketing and R&D.
                                                                        mainly of the big mining corpo-    of statistics released recently
                                  “There are many new compa-            rates so the new Credit Act will   showing that South African
                                  nies with no credit history that      not present a major challenge to   businesses are literally sitting
                                  are applying for and expecting        them. However, the group has       on a debt time bomb, Credit
                                  to be granted credit,” says           dealings with smaller customers    Guarantee has cautioned that
                                                                                                           the best times could quite easily
                                                                                                           be a “thing of the past” – credit
          The credit application form has become little more than an intro-                                controls need to be far more
          duction to the prospective debtor – it is merely the start of an                                 rigorously applied and terms
                                                                                                           more strictly enforced.
          intensive process that should go far beyond the usual bank, credit                               The credit application form
                                                                                                           has become little more than an
          bureau and trade reference checks.
                                                                                                           introduction to the prospective
                                                                                                           debtor – it is merely the start
                                  Lyrishe Gouws, credit manager         which present a totally differ-
                                                                                                           of an intensive process that
                                  at Panasonic.                         ent scenario when assessing the
                                                                                                           should go far beyond the usual
                                  “There are also many instances                                           bank, credit bureau and trade
                                  of independent dealers wanting        “Due to certain requirements       reference checks. There are
                                  to source electronic products         in the new Act and the limited     now a number of new impon-
                                  from us in order to grow a            research allowed, how will we      derables, some of which are
                                  customer base. They are being         know whether our assessment        simply unquantifiable and some
                                  granted credit that they simply       is accurate? If a customer         which most suppliers would
                                  cannot sustain,” she says.            defaults, you are obliged to       never be privy to, but which
                                                                        contact them in writing to         are very necessary to assess in
                                  The new National Credit Act
                                                                        ascertain where the problem        establishing a comprehensive
22                                will place a huge administrative
                                                                        lies and you are not allowed       credit risk profile:
                                  burden on suppliers to ensure
                                                                        to suspend the account. The
                                  that the end users do not over-                                          • Based on whatever informa-
                                                                        customer can therefore continue
                                  extend themselves.                                                         tion has been made available,
                                                                        purchasing which could result in
                                                                                                             is the company a viable going
                                  “To grant credit to an individual,    over-indebtedness. This in turn
                                  one will have to follow a proc-       can be construed as reckless
                                  ess which is in the realms of         management,” she says.             • Is it a subsidiary of another
                                  financial planning,” comments                                               company/larger group?
                                                                        Keevy points out that the new
                                  Gouws. “Credit bureaus will
                                                                        dispensation is going to require   • Are there inter-company loans
                                  not be permitted to give out

     No 108 – November 2006
professionals                                                                                Accredited Financial Services Provider #17691

  and are they secured?                 the operations, cash flow and
                                        ultimately, debt servicing?               THE BERNE UNION
• Under what terms could the
  ‘holding’ company call up the       • If the debtor company deals
  loans?                                 with fresh, frozen or heat-        CLIENT CARE/NEW BUSINESS HOTLINE: 011 889 7365
                                         driven production processes,
• Is the ‘holding company’
                                         can it sustain its operations                 Visit our website at
   viable and profitable?
                                         during power outages and for
• Are the directors and offic-           how long?                                                     E-mail:
  ers of your newest ‘prospect’
                                      • Does it have its own power
  honest and integrous?
                                        generator on standby and will       Gauteng: Telephone 011 889 7000
• Are they skilled profession-          it adequately service power         Credit Guarantee House, 31 Dover Street, Randburg
  als in the company’s field            requirements of production          P O Box 125, Randburg, 2125
  of operations and are they            over an extended period?
                                                                            Fax 011 886 1027 or 011 886 5715
  skilled at running a profitable
                                      • How will potential fuel short-        Business development consultants:
                                        ages affect the debtor com-           Malcolm Kourie Nici Large Llewellyn Paulsen
• Have they ever been seques-           pany in continuing its opera-
                                                                              Service consultants:   Nazel Veldtman Tracey Dansie
  trated/rehabilitated?                 tions?
                                                                              Business researcher:   Renate Janse van Rensburg
• Have they ever liquidated           • Does it have insurance against
  other companies before and            “business interruption” and
                                                                            Western Cape: Telephone 021 421 7830
  why?                                  under what circumstances
                                        will the policy indemnify the       13th Floor, No 1 Thibault Square, 1 Long St, Cape Town
• Is the company heavily indebt-                                            P O Box 6018, Roggebaai, 8012
   ed to third parties?                                                     Fax 021 419 7586
                                      • What are the debtor compa-
• Is the indebtedness secured                                                 Business development consultants:
                                        ny’s BEE credentials?
   by liens over fixed/movable                                                Claire Marx Willie van den Berg
   assets etc?                        There is of course another              Service consultant:     Danie van Niekerk
                                      question that every company
• How quickly does your debtor                                                Business researcher:    Marita Procter
                                      granting credit to other organi-
  (company) collect its own
                                      sations needs to introspectively
  debtors?                                                                  Eastern Cape: Telephone 041 363 4024
                                      ask from time to time: How
• Is its ‘intellectual capacity’ or   much bad debt can it absorb           First Floor, Mutual Place, cnr Cape Rd & Langenhoven Drive,
   ‘brains trust’ vested in one       before its own ability to exist is    Greenacres, Port Elizabeth
   individual or spread across        irreparably damaged?                  P O Box 27154, Greenacres, 6057
   the company?                                                             Fax 041 363 3750
                                      One solution for organisations
• Is the company’s ‘goodwill’         that do generously grant credit         Sales & service consultant: Ilsé Strydom
   generated by one individual        terms is to insure against the          Business researcher:      Brenda McEwan
   and what effect would the          untimely risk of non-payment
   sudden ‘removal’ of that indi-     by one or more of their
                                                                            Kwazulu/Natal: Telephone 031 265 0300
   vidual have on the company’s       debtors. In fact, this is anoth-
                                      er question to ask prospective        Suite 7, No 4 The Crescent, Westway Office Park, Westville
   future survival?
                                      new debtor companies on your          P O Box 2756, Westway Office Park, 3635
• Is it adequately insured                                                  Fax 031 265 0323
                                      credit application form: Do you
   against all possible risks, viz
                                      credit-insure your debtors?             Senior sales & service consultant: Lorraine Abbott
   fraud, fire, theft, etc?
                                      What would the effect be on             Business researcher: Andrew Reed
• Is the company able to deal         your debtor company if it was
   with stay-aways, strikes,          struck by the liquidation of one                                                                                               23
   industrial action, go-slows        of their debtors?                    CREDIT NOTES is published by Credit Guarantee Insurance Corporation of Africa
   and for what period?                                                    Ltd, (Reg No 1956/000368/06), PO Box 125, Randburg, 2125.
                                      “Insuring your debtors relieves      For subscriptions and information, please contact Ilsé Marais at tel 011 889 7530,
• Is the company situated in a        the pressure of many of the          fax 011 686 9830 or e-mail at .
   high risk/crime-ridden area        factors mentioned above and
   of the country and would this      puts them into the hands of an       Credit Guarantee does not necessarily endorse opinions expressed in this publication.
                                      insurer whose entire operation       Although all reasonable care is taken to ensure the correctness of facts and figures,
   impact the business in future?
                                                                           Credit Guarantee accepts no responsibility for the results of actions based on anything
                                      is designed to take the risk on
• What effect will potential          behalf of its clients,” concludes
                                                                           published in this issue.
  electricity outages have on         Munitich.                                    EDITED, DESIGNED AND PRODUCED BY TOPMEDIA • PRINTED BY CREDA

                                                                                                                            No 108 – November 2006