Geert Bekaert and Campbell R. Harvey's


Chronology of Economic, Political and Financial Events in Emerging Markets


South Africa


Major Political and Economic Events


Interest rate controls and credit ceilings were removed. Mehrez and Kaufmann Liberalization date. a1


Restrictions on bank competition were eliminated and new banks were allowed. Mehrez and Kaufmann's second Liberalization date. a1


The Stock Exchanges Control Act came into effect.a1


A standstill arrangement for a period of four months was introduced in respect of certain debt repayments. Any resident wishing to discharge a debt may only do so by credit of the amount to a special restricted account.a3(first entry)


Interim arrangements with respect to certain debt repayments were concluded with bank creditors. The arrangements are to be effective until June 1987.a3


The Reserve Bank ceased to provide long-term forward cover to public sector and government institutions.a3


New Interim Arrangements with respect to certain foreign debt repayments were concluded with bank creditors. The arrangements are to be effective until June 20, 1990.a3


Rights accruing on foreign securities owned by residents were allowed to be followed only through financial rand. Limits remained unchanged.a3


South African troops put down a 15-hour military coup in "independent" Bophuthatswana by restoring President Lucas Mangope to office. One month later, 17 major anti-apartheid organization were banned from any political activities.b


The authority of authorized dealers to release to immigrants, during their first three years of residence, up to R100,000 per family unit of assets that can be transferred through the medium of South African securities/financial rand was made conditional on the immigrant being in possession of a permanent resident permit.a3


The Rand foreign exchange rate quotation was altered from an indirect (one Rand equal to so many U.S. Cents) to a direct method (Rand per U.S. dollar).b


At four different times during the year, the government raised the bank rate from 9.5% to 14.5%, and increased the minimum deposit on all new-hired contracts by 20%. b


The import surcharge system was changed from a uniform 10% to rates ranging from 15% to 60%. b


Certain authorized dealers were granted permission to deal in financial rand for their own account, but not for speculative purposes, in order to facilitate their customers' requirements in respect of small amounts.a3


Special restricted rand accounts were redesignated nonresident accounts.a3


Transfer abroad of income earned by emigrants by means of commercial rand was limited to R 300,000 per calendar year; any excess over this amount was required to be credited to a financial rand account.a3


The price of gold fell and the Rand fell below US$0.40. b


The limit South African's could transfer through the Financial Rand for the purchase of securities was raised to R5,000. b


Value of motor vehicle that emigrant family or individual may export was increased from R 20,000 to R 40,000. Value of household and personal effects that may be exported by an emigrant family was increased from R 20,000 to R 40,000. Limit on assets new immigrants may retransfer abroad during the first three years of residence was increased from R 100,000 to R 200,000.a3


The Nkomati Accord with Mozambique was resumed. A formal peace treaty was signed with Angola, allowing for the phased withdrawal of 50,000 Cuban troops and the end to the war. Namibia was promised independence, effective April 1, 1989. b


In the wake of scandals revealing large-scale round-tripping schemes, MPs and senior officials resigned. President P.W. Botha resigned as party leader, but stayed on as President. b


The Reserve Bank raised its discount rate 1.5% to 16% to fight inflation. b


President Botha stepped down due to the power struggle with F.W. de Klerk, leader of the ruling National Party, who was sworn in as Acting President. b


Nonresidents were prohibited from purchasing farms and residential properties with the financial rand.a3


The ruling National Party lost in the election and F.W. de Klerk became President. b


Foreign creditors agreed to reschedule repayment of US$8 billion of debt. b


The introduction of the Insider Trading Laws.a4


Nelson Mandela, a leader of the African National Congress (ANC) was released from prison after 27 years. Restrictions on the ANC, banned for 30 years, and other anti-apartheid organizations were lifted. Peaceful political protest was legalized. b


Debeers announced that it was transferring control of all its foreign holdings to Switzerland. b


Namibia became independent. b


The limit on transfers an emigrant family allowed to make through the medium of financial rand was increased to R 200,000 from R100,000.a3


The ANC suspended its 30-year-old guerrilla campaign but factional fighting still raged. b


The government suspended two-year-old plans to sell off State corporations and other public enterprises. b


The Banks Act was passed, regulating the function of deposit-taking which is supervised by the bank Supervision Department of the Reserve Bank.a8


The South African Futures Exchange (SAFEX) began operations under a license issued by the Registrar of Financial Markets which authorized it to regulate the trading of futures and options as the only derivative exchange in South Africa.a8


The nominally independent black homeland of Ciskei and South Africa began steps to reincorporate Ciskei into South Africa. After introducing legislation to repeal the Land Acts of 1913 and 1936, the Group Areas Act of 1966 and the Black Communities Act of 1984, the 12-nation European Community agreed to lift its remaining economic sanctions which would end the ban on imports of gold coins, iron and steel. b


South Africa Fund initiated.a12


South Africa's first all-race elections were held on April 26-29 with the African National Congress (ANC) party receiving 62.6% of the vote. Nelson Mandela was elected president of the Republic of South Africa on May 9 and was inaugurated as president on May 10 in Pretoria. Outgoing President FW de Klerk of the National Party became second deputy president and Derek Keys remained the finance minister. Inflation rate dropped to a 21-year low of 7.1%.


Keys announced he would leave his position in October. Chris Liebengerg, former chief executive of the Nedcor banking group replaced Keys.


ADR effective date. (Company=PEPKOR LIMITED 144A, Exchange=PORTAL)a11


Moody's and Japan's Nippon Investment Services gave the country investment grade ratings of Baa3 and BBB respectively, while S&P and the European IBCA gave the country BB ratings with a positive outlook.


The government returned to international capital markets with a $750 million dollar bond offering.


The financial rand and the nine-year-old currency exchange system were abolished. The 15% tax on dividend remittances by non-resident shareholders was eliminated, effective from Oct 1, 1995.


Foreign banks were permitted to establish in branch form in South Africa subject to several restrictions.a8


Local government elections were carried out smoothly.


The Johannesburg Stock Exchange began admitting foreign brokerages and banks as members, allowing them to trade directly on the exchange. The exchange would also abolish fixed commissions, allowing market making, and initiate screen based trading in March 1996.


A restriction on foreign membership in the JSE (Johannesburgh Stock Exchange) was lifted.a8


The Bond Exchange of South Africa (BESA) was licensed by the FSB as a self-regulatory financial exchange to replace the previous over-the-counter bond market.a8


Trevor Manuel was appointed as Finance Minister.


National Party resigned from the government. Elections went on peacefully in KwaZulu-Natal.


Access to domestic credit by foreign controlled entities was relaxed and the local financial assistance ratio doubled from 50% to 100%.a3


The limit to enter into asset swaps by institutional investors was increased from 5% to 10% of local assets. They were also permitted to make foreign currency transfers during 1996 of up to 3% of the net inflows of funds generated during the 1995 year within the overall 10% of total asset limit.a3


Offshore investment expansion by corporations was permitted, provided it is financed by profits generated offshore from existing assets or financed abroad without recourse to South Africa.a3


Direct investment by corporations in countries outside the CMA will only be required to demonstrate a longer-term benefit to the country as opposed to an immediate benefit.a3


Access to domestic credit by foreign controlled entities was relaxed and the local financial assistance ratio doubled from 50% to 100%.a3


South Africans temporarily residing abroad were permitted to enjoy the same settling-in allowance as emigrants. The ratio of 1:3 shareholders equity to shareholders loan funds of an affected person was eliminated.a3


Quoted securities may be exported as part or in lieu of the emigration facilities.a3


(Controls on direct investment) Direct investment by corporations in countries outside the CMA of up to R 30 million was permitted and into SADC, an amount of up to R 250 million is allowed. Any higher amount has to be financed abroad. Income earned abroad and capital introduced into the Republic on or after July 1, 1997 by private individual residents in South Africa may be retransferred abroad. Foreign investment by natural persons in South Africa was increased from R 200,000 to R 400,000.(Controls on personal capital movements) Authorized dealers may also authorize the export on from N.E.P. of any household and personal effects, motor vehicles, caravans, trailers, motorcycles, stamps, and coins for a family unit or a single person emigrating within the overall insured value of R 1 million. (Provisions specific to institutional investors) Qualifying institutional investors may acquire foreign portfolio investments by way of asset swaps for up to 15% of their total South African assets. a3


Cape Town lost its bid to host the Olympics in 2004.


The Reserve Bank cut its bank rate from 17% to 16%. Gold price plunged to less than $290 an ounce.


Concerns about the possibility of higher U.S. interest rates and the effects of the continuing economic crisis in Asia weighed on the market.


Labor Minister Tito Mboweni was appointed the nation's next central bank governor, replacing Chris Stals in August 1999.


In its fiscal 2000 budget, the government cut the standard rate on taxable income of nonmining companies to 30% and for the South African branches of foreign owned companies to 25%.


(Provisions specific to institutional investors) On outward portfolio investment, the exchange control authority may authorized up to 15% of total South African assets for each qualifying institution to be invested abroad by way of an asset swap: 5% for 1998 and the remaining 10% in securities listed on stock exchanges in SADC countries.a3


South Africa held its second democratic election.


The European Central Bank announced a 400-ton ceiling on the amount of gold that could be sold into the market, with an additional cap continuing for the following five years.


Stanbic and Nedcor, the third and the fourth biggest retail banks planned to merge.


S&P upgraded South Africa's foreign currency sovereign rating to investment grade. PPI increased by 8.4% in February.


(Provisions specific to institutional investors) The limit on outward portfolio investment was changed to 15% and based on all assets, from solely South African assets. Unit trust management companies no longer qualify for this treatment. Foreign currency transfers are allowed up to 10% of the net inflow of funds (previously 5%).a3


In the second quarter, the landmark IPO of Telcom was announced, and the government projected 40 billion rand revenue from the sale of government assets.


Domestic companies moved their main listings to London to avoid tight foreign exchange controls and raise capital more easily over the last two years. Dimension Data followed this trend, moving its main listing to the U.K., raising US$1.25 billion abroad.


In the fourth quarter, the newly named JSE Securities Exchange South Africa moved to Sandton and discussed a technology partnership with the London Stock Exchange. A new financial instrument, the Satrix 40, was launched.


An Agency aimed at cracking down insider trading was introduced.


Interest rates were lowered from 25.5% in mid-1998 to 14.5%.


During the first quarter, a complex capital gain tax jeopardized the investment environment. The first case of land expropriation was reported.


Person income tax was cut.


The policy committee lowered the repo rate to 11%.


In the third quarter, more violence erupted. Telkom's privatization was delayed.


During the fourth quarter, international rating agencies upgraded the country's sovereign currency credit ratings. The rand continued to depreciate.


New reforms were announced in 2001, including an 8.3 billion rand personal income tax relief, increases in key spending programs, sustained investment in social and economic infrastructure, land redistribution through the sale of state-owned land and a new mining bill. A new 35 million rand campaign policy is expected to attract foreign direct investment.


The South African treasury has disclosed that it has made its final payment to settle the outstanding foreign debt dating back to the apartheid era. According to the statement, a final repayment of R56.85bn (US$6.9bn) on the R112.3bn (US$13.6bn) deemed affected by the 1985 'debt standstill', or moratorium, was made by the National Treasury on 15 August 2001.


The South African Reserve Bank (SARB) announced a cut to its main lending rate, shaving 100 points off the repurchase rate  to 10%, effective from today


The South African Reserve Bank (SARB) yesterday announced a cut to its main lending rate, shaving 50 points off the repurchase rate  to 9.5%, effective from today


More than 20 months after the plan was initially muted, the controversial Capital Gains Tax (CGT) has finally become a reality this morning, bringing South Africa in line with 'international best practice'. CGT, which was introduced in February 2000, was due to have become effective on 1 April 2001, but the introduction was delayed by Finance Minister Trevor Manuel for another six months to 'give the private sector, and the financial services industry in particular, time to adjust'. Under the proposed tax, which the government claims would bring the country in line with international best practice, individuals would be taxed at a rate of 10.5% while companies face a charge of 15%.


The country's central bank, the South African Reserve Bank (SARB), has suspended 130 local branches of the international money transfer company, Western Union, for breach of South Africa's existing foreign exchange regulations. The Reserve Bank took its decision in its capacity as banking and foreign exchange regulator, following sting operations that uncovered the breach


The 15-month alliance between the country's two opposition parties, the Democratic Party (DP) and the New National Party (NNP), is at an end following weeks of infighting. The widely anticipated move was confirmed late on 26 October 2001 by NNP leader Marthinus van Schalkwyk, who said his movement 'suspends its participation' in the opposition Democratic Alliance (DA) coalition 'with a view to shortly withdraw from the alliance'


A clearer understanding of the government's position on the issue of mineral rights in the revamped minerals rights bill has emerged. Under pressure from the minerals extraction industry, the government has agreed to waive its rights to royalties, currently paid to landowners who hold mineral rights, for 10 years after the new Minerals and Petroleum Resources Development Bill comes into effect. The government will hold the rights to all minerals within the land once the Bill is promulgated into law, unlike the current situation where private companies hold such rights.


Following two years of undercover operation, South African police have announced the smashing of five platinum smuggling syndicates in the country's North-West Province. In the operation dubbed Operation Gold, police arrested 40 people, including two policemen and a number of mine employees, and seized nearly R9m (US$950,000) worth of the precious metal in a pre-dawn raid yesterday. Aerial photographs were used to pinpoint the sites where the stolen platinum was processed into nuggets, which was either sold in South Africa or smuggled by ship to Europe.


The country's ruling party, the African National Congress (ANC), has proposed draft legislation that would allow members of parliament and the provincial assemblies to switch party affiliation without losing their seats. A key aspect of the Loss or Retention of Membership of National and Provincial Legislatures Bill provides for the country's president to determine the 'window period' for elected representatives to change parties.


In the latest fight against the practice of insider trading, the government is likely to seek jail sentences to punish offenders. According to a report by the London (UK)-based Financial Times newspaper, the country's elite crime fighting force has identified insider trading on the local bourse - the JSE Securities Exchange (JSE) - as one of the greatest threats to the country's economic security. The


The long-awaited enquiry launched to investigate allegations of corruption surrounding the controversial R43bn (US$5.5bn) arms procurement program has cleared the government of any wrongdoing. In the report released yesterday, the three law enforcement agencies investigating the country's biggest-ever arms deal - the Public Prosecutor, the National Directorate of Public Prosecutions and the Auditor-General - concluded that 'no evidence was found of any improper or unlawful conduct by the government'.


Parliament has finally approved amendments to the country's existing labor laws, 16 months after the government first proposed the reforms to a labor market seen as 'business-unfriendly’


The ruling ANC and the New National Party announce a merger.


High Court rules that pregnant women must be given Aids drugs to help prevent transmission of the virus to their babies.


The country's central bank, the South African Reserve Bank (SARB), raised the key repo rate by 100 basis points to 10.5% in a move aimed at countering inflationary pressures arising from the steep depreciation of the rand in Q4 2001.


Seven years of negotiations came to an end when South Africa and the European Union (EU) finally signed a deal on wine and spirits. The deal will allow South African wines and spirits to enter the bloc duty-free.


A double tax agreement was signed between New Zealand and South Africa


The Reserve Bank increased its benchmark repo rate by 100 basis points to 11.5%.


Court acquits Dr Wouter Basson - dubbed "Dr Death" - who ran apartheid-era germ warfare program. Basson had faced charges of murder and conspiracy. ANC condemns verdict.


President Thabo Mbeki has decided to pardon 33 prisoners convicted of political crimes during the Apartheid era, despite strongly expressed opposition from Archbishop Desmond Tutu, who chaired the Truth and Reconciliation Commission (TRC).


Constitutional court orders government to provide key anti-Aids drug at all public hospitals. Government had argued drug was too costly.


The country's new Labor Relations Act and the Basic Conditions of Employment Act are set to be implemented.


President Thabo Mbeki signed the long-awaited Electronic Communication and Transactions Bill into law.


The country's central bank, the South African Reserve Bank (SARB), raised its key repo rate by a percentage point (100 basis points) in a bid to cool off the threat of rising inflation. This increase is the fourth this year, taking the repo rate (the rate at which the SARB lends money to commercial banks) from 12.5% to 13.5%.


A series of bomb explosions in Soweto and a blast near Pretoria are thought to be the work of right-wing extremists. Separately, police charge 17 right-wingers with plotting against the state.


The government approved the long-awaited draft mining charter, which sets out to give the country's disadvantaged black population a bigger role in the mining sector.


The government set a new minimum wage for farm workers, with the threshold being adjusted to R650 (US$70) per month, rising to R800 (US$86) in high-income areas, effective from March 2003.


The South African parliament voted and adopted an amendment to the country's 1996 constitution that will enable politicians to switch parties without losing their seats at both a national and provincial level.


Tony Yengeni, the former chief whip of the ruling African National Congress (ANC) party who was recently convicted of fraud relating to a controversial R43bn (US$5.16bn at current exchange rates) arms procurement deal,  resigned as an MP after he was prompted by his party.


Walter Sisulu, a key figure in the anti-apartheid struggle, dies aged 91. Thousands gather to pay their last respects.


The presidents of four ethnically-divided business chambers - the National African Chamber of Commerce and Industry (NAFCOC), the South African Chamber of Business (SACOB), the Foundation for African Business and Consumer Services (FABCOS) and the Afrikaanse Handelsinstituut (AHI) - announced a merger this weekend (10-11 May 2003), which will create a single, unified business entity expected to be launched in September 2003.


The South African Reserve Bank cut the leading repo rate by 1.5% to 12% as adjusted inflation allowed for stimulus of the slowing economy.


The South African Reserve Bank (SARB) - the central bank - announced a 100 basis-point cut in its key repo rate to 11%, as the threat of inflation continues to recede.


The South African parliament finally approved the controversial broad-based Black Economic Empowerment (BEE) bill - nearly four months after it was first tabled.


SA Reserve Bank announces 1% interest-rate cut.


South Africans temporarily working and living abroad will not be able to vote in the 2004 general elections, following the adoption of a controversial new laws by the country's parliament on 26 September.


A new charter, which sets out the development of Black Economic Empowerment (BEE) in the country's previously white-dominated financial sector, was published.


South Africa's upper house, the National Council of Provinces (NCOP), unanimously approved the Unemployment Insurance Amendment Bill, which aims for better protection of domestic workers


Two of South Africa's leading opposition parties, the Democratic Alliance (DA) and the Inkatha Freedom Party (IFP), announced that they are joining forces to fight the 2004 general elections.


Government approves major program to treat and tackle HIV, Aids. It envisages network of drug-distribution centers, and preventative programs. Cabinet had previously refused to provide anti-Aids medicine via public health system.


The South African parliament approved the controversial draft Anti-Terrorism Bill, despite intense opposition from Muslim groups and human rights organizations, who have claimed that the proposed law gives the government and the country's security forces unlimited powers.


South Africa's National Assembly has approved a new anti-graft bill, the Prevention and Combating of Corrupt Activities Bill, which will take the fight to prevent and fight corruption to the private sector.


The year-on-year consumer price index (CPIX) fell to 4.1% last month, down from October's 4.4%, according to Statistics South Africa. The figures show that inflation in the country is down to its lowest levels since 1959.


Ruling ANC wins landslide victory in general elections, picking up just under 70% of vote.


Thabo Mbeki is sworn in as president for a second term.


President Thabo Mbeki named a new cabinet, which contains a handful of opposition figures.


Moody's Praises South Africa for Post-Apartheid Political and Economic Achievements, Raises Rating for Rand-Denominated Government Debt


Following a five-day road show in Europe and the US, South Africa's treasury launched its 10-year, US$1bn with a coupon rate of 6.5%, just 195 basis points above the comparable US 10-year treasury bond. The bond had been very well received by investors.


The South African Reserve Bank's (SARB) Monetary Policy Committee has announced that the repo rate is to remain unchanged at 8%


In yet another twist surrounding South Africa's much-debated privatization program, Public Enterprises Minister Alec Erwin yesterday admitted that the government has ruled out the sale of any state-owned enterprises in the current financial year (April-March), whilst remaining committed to the process


The South African rand has maintained its current status as one of the world's best performing currencies yesterday, climbing to its best level in five years against the US dollar. The rand surged to R6.06:US$1 yesterday - its best level since 1999 - on the back of the continued weak performance of the US dollar - which fell to its worst three months level against the euro - and improved prices for precious metals such as gold and platinum


In a report released at the 15th International AIDS Conference in Bangkok, Thailand, the International Labor Organization (ILO) has estimated that HIV/AIDS cost South Africa US$73bn between 1992 and 2002, as a result of death, absenteeism and lower productivity. The ILO argues that the disease has weakened South Africa's human capital - which the country had been struggling to build since the end of the Apartheid regime - and lowered the productive capacity of workers.


South African Reserve Bank (SARB) Governor Tito Mboweni, who has recently been re-appointed for a second five-year term, has pledged to continue the policies that marked his first term, namely pursuing low inflation rates under the existing monetary policy framework, and the gradual build-up in South Africa's foreign reserves to avoid SARB dollar purchases adversely impacting on the exchange rate.



Regulations on Foreign Investors


Restrictions: 1. ADR holders qualify for the same voting rights, dividends and accruals as do the underlying shares. 2. Foreign investors may be listed on the South African "Cape" register, with the shares being held physically by the investor or by a South African custodian. 3. All foreign-owned securities carry on the share certificate the restrictive endorsement "non-resident" against transferability in the ownership of the stock. Only authorized dealers may effect to cancel the endorsement with authorization from the South African Reserve Bank. Any letter of right, letters of allotment, options, etc. must also be endorsed before they are issued to non-residents.

Taxation: 15% dividend tax rate (lower if investor's country has double taxation treaty with South Africa) and no tax on capital gains.a5(first entry)


Restrictions: 1. Ceiling on a few sectors, for instance, 15% foreign investment in banking. 2. Foreign-controlled firms are subject to domestic borrowing restrictions.

Taxation: Beginning January 1st, South Africa moved to a residence-based income tax systemCorporate capital gain tax is 7.5-17.5% effective October 1st.


No changes.


nt" against transferability in the ownership of the stock. Only authorized dealers may effect to cancel the endorsement with authorization from the South African Reserve Bank. Any letter of right, letters of allotment, options, etc. must also be endorsed before they are issued to non-residents.

Taxation: 15% dividend tax rate (lower if investor's country has double taxation treaty with South Africa) and no tax on capital gains.a5(first entry)


Restrictions: 1. Ceiling on a few sectors, for instance, 15% foreign investment in banking. 2. Foreign-controlled firms are subject to domestic borrowing restrictions.

Taxation: Beginning January 1st, South Africa moved to a residence-based income tax systemCorporate capital gain tax is 7.5-17.5% effective October 1st.


No changes.