An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content
SADC 01 Sunday 28th July 2013
For futher information on this report, please visit: www.businessfocus.org.uk
ZAMBIA
LESOTHO
SOUTH AFRICA
Land of Victoria Falls is embracing diversification.
Mountainous and full of untapped resources.
Tackling the energy challenge head-on.
SADC
Vibrant region showcases huge potential Written by Niki Thornton
BusinessFocus 29th Floor, One Canada Square Canary Wharf, London E14 5DY United Kingdom Tel. +44 20 7712 1699 Fax +44 20 7712 1501
02 SADC ZAMBIA
ZAMBIA
Leading the region’s bright future
O
ne of the world’s fastest economically reformed countries and Africa’s largest copper producer, Zambia is going from strength to strength in its mission to become a middle-income country by 2030. Peaceful and democratic, the country is in the midst of an economic diversification programme that is seeing new impetus in other resources, including agriculture, tourism, gemstone mining and hydropower. Led by business-friendly President Michael Chilufya Sata since September 2011, the forward-looking country is gearing up to host the U.N. World Tourism Organisation’s general assembly from 24-29 August, and will use the event to showcase its suitability for tourism, particularly the meetings, incentives, conferencing and exhibition (MICE) industry, through its vibrant capital Lusaka. In economic terms, Zambia is a beacon for Africa. Growth averaged 6% between 2000 and 2010, and there was significant investment in infrastructure. Last year, copper output reached its highest level in a decade, which, thanks to the doubling of copper prices in the past three years, caused a significant growth spike. Sustained economic growth and poverty reduction are the watchwords of the country’s Sixth National Development Plan 2011-2015; a blueprint for change that will build on the gains, promote rural investment and enhance human development. As Dr Michael Gondwe, governor of the Bank of Zambia explains: “[Zambia’s business environment] is among the best you can find in Africa. The financial sector is going through important reforms to buffer the economy against shocks. The required capital for foreign banks was raised to $100 million, and $20 million for local banks, because without a proper financial sector, you cannot talk about development. Banks used to be able to set up here with just $2.4 million in the coffers. The increases will therefore have a huge effect; that capital will be directed into us financing business, and forces the institutions to be more solid.” “The government wants people to be more productive and create more jobs,” Gondwe says. “Last year, the Minister of Finance said he wanted to create a million jobs by 2015. That’s quite ambitious, but it ensures the leadership is confident.” In the meantime, Gondwe has put in measures to ensure inflation does not exceed 6% this year, and rebased the currency in January, which, he said, managed to “get rid of three zeros.” He would also like to see the percentage of the population that is “banked” double within two years to 15%. Once their financial literacy is bigger, local people also tend Meanwood General Insurance to be good entrepreneurs,” he says. Lusaka, ZAMBIA The idea of financing entrepreneurs, www.meanwoodgeneral.co.zm particularly small-scale farmers, is some-
Ready for take off? Taking Zambia forward as a tourism, transport and commercial hub for the southern Africa region.
thing BancABC, part of ABC Holdings Ltd., is taking seriously. With operations in Botswana, Mozambique, Tanzania, Zambia, Zimbabwe and a group services office in South Africa, the bank offers personal, business and corporate banking as well as asset management, stock-broking and treasury services. “If you look at Africa, it’s all about agriculture, and if you look at production, 70% of it comes from small farmers—that’s one of the things that has contributed to food stability in the last three years,” says Clergy Simatyaba, BancABC’s managing director. “As a financial institution, we are having to play an active role: farmers need to be funded in order to continue producing and they need to be helped. We have a good understanding of the region and the market, and we speak to the customer, so they just get what they need.” The bank is keen to cooperate with London banks. “London is one of the world’s best-organised financial services centres, in terms of product range, structure and access to liquidity. By cooperating with them, we could start entering new markets,” Simatyaba says. Fast-growing Goldman Insurance Ltd. is putting great efforts into improving penetration figures, as well as educating and training its management abroad. This international experience, says CEO, M.N. Raju, has given the firm the skills to be able to diversify and innovate earlier than others in the market, and become the market leader. “Our growth for 2012, was 20%, but we want to see 35% in 2013,” Raju says. “We are very confident we will be able to penetrate because of our network and financial strength. We go to all the remote places of the country and set up sales offices. We employ people to market the product. In construction, they need to insure everything, their equipment, their people, everything, so we target them. Also, I’m
Insuring their future
At the forefront of Zambia’s competitive insurance industry, Goldman Insurance Limited enjoys a world-class reputation and provides valuable support to countless communities through micro-insurance.
Lusaka, Zambia goldman@zamnet.zm | www.goldman.co.zm
Because we care
Attaining and maintaining international standards As the Zambian economy takes off, we are doing everything in our power to meet the new demand safely and efficiently.
Department of Civil Aviation Independence Avenue. Block 26A P.O. Box 50137 – 15101, Lusaka, ZAMBIA www.dca.com.zm Tel: +260 211 252476 | www.flyzambia.com
An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content
ZAMBIA SADC 03
Investment-ready sectors include: agriculture, livestock, fisheries and forestry; tourism, hospitality and real estate; and manufacturing and the emerging industries like infrastructure, ICT and services. “They will be an important element of human capital investment, and have a direct impact on education and skills,” Chipwende says. “Through PPPs, the provision of these types of services will improve. We also need to improve Zambia’s export base; we need new markets.” The E.U. is one such market, of course. Both COMESA and the SADC have witnessed remarkable growth in recent years, and Zambia is gearing up to trade from a regional perspective. As Chipwende says, “we will be able to export anything to the E.U. We still think there is more to be done on the supply side both in quality and quantity to satisfy the strict E.U. standards, but again, this is where FDI comes in.” Michael Gondwe Governor Bank of Zambia
Francis Grogan CEO Zambeef
Tony Irwin Managing Director Proflight
very keen to know what’s happening in the rest of the world, not only Zambia. We are confident that we will be able to move ahead. I believe the U.K. can bring not only capital, but also experience, knowledge and technology.” New technology is what will give Meanwood General Insurance Co. its competitive edge, according to managing director Tobias H. Milambo. Despite only being in the market for just over a year, the 100%-local company, made up of an experienced team that “thinks differently” is growing fast. “If we can connect with the banks, we can introduce monthy installments. It is very important to position our brand. Our focus is global.” One of the leading players behind the government’s diversification process and job creation plan is the Zambia Development Agency. Headed by CEO Andrew Chipwende, ZDA was established in 2006 and is responsible for promoting trade and investment, and an efficient, effective and coordinated private sector-led economic development strategy. “FDI is not only about resources, but about jobs, technology and access to markets,” Chipwende says. “Between 2004 and 2012, the FDI inflow was six times larger than the decade up to 2004. Last year, for the first time in Zambia’s history, we approved $10 billion worth of projects. The implementation rate is around 30%, so over the next three years, there will be $3 billion of realised investment. The new reforms will help us improve this figure even more.”
One of the largest integrated agribusinesses, involved in production, processing, distribution and retailing of a wide range of food products.
Tel: +260 211 369 003 www.zambeefplc.com
Landlinked, not landlocked Under the SNDP, the government has also pledged to accelerate investment in transport and infrastructure, making Minister of Transport, Works, Supply and Communications, Chris B. Yaluma, a prominent politician in the country. Thanks to a huge investment budget, the Ministry plans to build 8,000 kilometres of road in the coming years, as well as upgrading the railways. “We know that without a solid road network, there is nothing that can be achieved to support economic growth. Zambia is centrally located among the SouthernAfrican countries: Tanzania, Malawi, Zimbabwe, DRC, Botswana and Namibia. You cannot think of a better place to do business or transport cargo or merchandise: but whatever it is, our road network is essential to our economy. “We need contractors and civil engineers, and we are dependent on resources from outside to guarantee this. Zambia is no longer landlocked, but landlinked. The roads we are building right now confirm this. The railways are not bad, but we need to improve some lines. Copper mining has moved from the Copperbelt area to the North-Western province, so there will be lots of revenue to the government from the traffic and cargo coming in from Congo to Angola and Zimbabwe.” Significant change is also afoot in the aviation sector. Having been banned from flying in E.U. skies in 2009, Zambia’s Department of Civil Aviation is breathing a huge sigh of relief at having successfully resolved safety concerns early this year. As director Adam Daka says: “When we have the report from the International Civil
Renewable energy Renewable investment With huge, solar and hydroelectric power potential, Zambia is making cleaner energy a priority for the future. Prospective stakeholders can rest assured we will provide a world-class, safe and fair investment environment as they explore and enjoy the many opportunities.
Zambia’s unlimited potential awaits you Zambia Development Agency Privatisation House, Nasser Road P.O. Box 30819, Lusaka, Zambia Tel: +260 212 229 240 | www.zda.org.zm
Energy Regulation Board Lusaka, ZAMBIA www.erb.org.zm
04 SADC ZAMBIA Aviation Organisation, our next step is to engage the E.U. so that they lift the ban. Since the ban the E.U. has given the sector 3 million euros. It has helped in areas of training, capacity-building, the transformation of this department into the civil aviation authority, as well as the areas of procurement of equipment. They are also helping us draft our legislation so it ties into international standards.” The DCA has signed agreements with many airlines but is keen to attract more by improving its main airports. It is also building a terminal at Livingstone International Airport, which will be ready before the UNWTO event. “We want Zambia to become a hub so that we capture traffic from Johannesburg and Nairobi this side.” Proflight Zambia, which was founded in 1991 by ex-Zambia Airways pilot Tony Irwin, is providing a vital air service in the country by flying both business people and tourists to the Copperbelt, Luangwa Valley, Victoria Falls and Lower Zambezi. The company, which will launch flights to Malawi and the DRC this year, is pleased to be providing a key service at the UNTWO with a new 737 aircraft. “The event will increase Zambia’s exposure, which is good,” Irwin says. “Arrivals to Livingstone airport have increased substantially so to continue that growth, we are bringing in the 737. It has 100 seats and is a bit step up from our usual 30.” The proud Zambian company is growing at an average rate of 20% year on year. “Usually, tourism accounts for only a third of our revenues, and we have a small local market. The business and mining sectors are much stronger for us because they are not seasonal. Lusaka is developing into a mini-hub and we are seeing an increase in airlines coming, such as KLM and Emirates. Zambia is very connected to all the hubs in Africa, Dubai, London and Amsterdam,” he says.
Garnering resources The government has adopted a pragmatic mineral policy, designed to enhance investment in the privatized mining industry and ensure the development of a sustainable minerals-based industry. New mining regions are being identified and a further 15% added to the geological map, meaning half the country’s natural resources are now mapped. As well as copper, there is zinc, diamonds, some of the best emeralds in the world, and amethyst. For Yamfwa Mukanga, Minister of Mines, Energy and Water Development, the priority now is to add value to these lucrative resources.
“We need to know how much the mining companies are producing, so that we get what is due to us,” he says. Zambia also boasts 40% of the SADC’s water resources, making hydropower a huge opportunity. Recent discoveries of oil fields in neighbouring countries suggest there may be oil in Zambia too. Dr. George Chabwera is chairperson of the Energy Regulation Board, the entity that is balancing the needs of energy consumers with the undertakings of the utilities companies. His main challenge is to improve electricity’s efficiency and access to rural areas. “The energy sector is going to a play an immediate role in Zambia’s development,” he says. “First, we must investigate is the green code—an agreement on how much the utility will charge per kw to move electricity. Once we have the green code done, then we will have an agreement, we will generate electricity and sell it to the consumer who’s maybe 500 km away from them. The utility companies have to be very efficient to be able to market the transport infrastructure. “When we have the green code, we are going to attract new investment, and we are hoping it will come from the U.K. We can generate electricity here and sell it domestically at profitable prices but also export it and the export market in Africa remains a very strong, big economy. Eventually it will also put power to Europe. Electricity can be transported in a very efficient way. Some 22% of the population has access to electricity. Over the next five years, we will increase that to about 35-40%.” With the highest poverty levels in the rural areas, more investment in agriculture infrastructure is critical to increase productivity. Only 10% of the arable land is used, and over half the country’s land is arable. The potential for Zambia to feed the continent is huge. Local beef manufacturer Zambeef Products plc shows how well agri-businesses can run in the country with the right investment and good local management. As well as being involved in the production, processing distribution and retail of beef, chicken, pork, eggs, milk, dairy products, edible oils and bread throughout Zambia and West Africa, Zambeef also provides feedlot services, leather and shoes and operates a fast-food restaurant chain and trucking company. Francis Grogan, Zambeef ’s CEO, believes the company’s sophistication is a good advertisement for Zambia. “The business started in 1991, but our big break came
Lusaka on course to become a city of the future One of the fastest-developing cities in Southern Africa, Lusaka is at the centre of both commerce and government in Zambia and connects to the country’s four main highways heading north, south, east and west. Having been hailed one of Africa’s most innovative and globally competitive cities by the MasterCard African Cities Growth Index in February this year, Lusaka’s potential cannot be underestimated. It is English speaking, business is booming, and the population has risen to around 3 million but, like many commercial capitals, it has challenges, not least an acute demand for housing and office space. Dynamic Mayor Daniel Chisenga, who was sworn in in 2010, is committed to remedying this. The city council, he explains, has a lot of infrastructure in prime areas, which it has failed to maintain due to lack of resources. Some of this infrastructure is key to investment. “Since we have some prime pieces of land, we have decided to get into public-private partnerships with developers that could use this land to put up hotels and shopping malls,” he says. Lusaka is currently a hive of activity. The Government of Zambia through the Ministry of Commerce, Trade and Industry plans to develop a 2,100 hectare Multi-Facility Economic Zone (MEFZ) in Lusaka. The MFEZ has a completed master plan with implementation expected as soon as funding partners are confirmed. Roads and other support infrastructure developments are already ongoing, including a new ring-road around the city. The MFEZ is expected to provide high-class infrastructure and target both export and domestically oriented businesses. The Government is seeking potential partners to provide financing, develop and manage the proposed zone. This will be the base for creating a new industrialisation drive in Zambia.
Lusaka City Council’s budget rose to 16% in 2013, with K2.6 billion (£0.3 billion) earmarked for capital project equipment to address the issue of transport. “Our number one priority is to ensure we reduce congestion on our roads,” the Mayor told Business Focus. “We are also working with the Zambian Development Agency to see how the road network can be expanded. We expect to see a
Our number one priority is to reduce the congestion on our roads. Daniel Chisenga, Mayor, Lusaka City Council
complete change in the face of Lusaka. The local community also wants proper drainage and sanitation and the U.S. government has provided a million-dollar potable water and sanitation project that will solve this. A new airport is under construction that will significantly increase our tourism sector.” Officials are keen to see strong U.K. investment. “We follow British standards,” Chisenga says. “However, we need more cooperation and support. The arrival of U.K. investors will be essential for the city.” Other plans for Lusaka’s development include the decentralisation of various amenities to other parts of the city, and the growth of the manufacturing sector, particularly food processing.
Lusaka City Council Office of the Town Clerk, Plot Nº Rem 3249. Civic Centre, Independence Avenue. P.O. Box 30077 Tel: +260 211 250 773 | Fax: +260 211 252 141 | Email: info@lcc.gov.zm | Website: www.lcc.gov.zm
An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content
in 1995. We were still fairly small, with about 250 acres, and we got involved with Shoprite, a South African supermarket. They bought seven of the old governmentowned supermarkets here and took us on to run the butchers’ department for them. Now they have 20 stores around Zambia and are planning to launch up to 10 more. “In 1996, we acquired our first farm, and in 1999, we put in our first chicken houses. Now we have almost 8,500 hectares under irrigation and are one of the single biggest crop operators in Africa, to my knowledge. We control the whole process, from the corn growth, to the chicken in the shops. The retail chain drives everything we do and we reinvest every year in our operations: we have 120 outlets all over Zambia and have opened three wholesale stores, with three more in the pipeline. Rainbow’s Chickens of South Africa recently took a 49% stake in our chicken operation. “Our challenge for the past couple of years has just been to keep up with demand. We are therefore working hard on our capacity, and are expecting to export more and more products.” The government also plans to make the tourism sector more viable and competitive through improved infrastructure. Bringing a modern and cosmopolitan touch to the country, The Radisson Blu Hotel in the centre of Lusaka is perfectly situated in an attractive commercial district near the airport. The hotel has become a reference point for business meetings, also includes executive spa, a pool and fitness club and a stylish restaurant and bar. Radisson has even championed a training scheme for selected school-leavers at a nearby orphanage. “We believe the RBH will continue to make a meaningful contribution to the lives of locals, while offering world-class hospitality to all our guests,” says general manager Nils Rothbarth. Education is an obvious pillar for the future, with the high percentage of young people and the increasing demand for human resources driven by economic growth. Both public and private universities are currently finding their lack of facilities a challenge. The programmes at Copperbelt University, for example, one of the country’s three public universities, located in the heart of the mining area, attract more than 5,000 applications a year for its 1,200 available places. “We need more laboratories, more libraries and more lecture theatres,” says the university’s vice chancellor, Prof. Naison Ngoma. “We have a very strong link with industry and are therefore able to see what it is looking for in terms of programmes
Andrew Chipwende CEO, Zambia Development Agency
Stephen Simukanga Vice Chancellor University of Zambia
ZAMBIA SADC 05
Chris B. Yaluma Minister of Transport, Works, Supply and Communications
and knowledge. Most in-demand are technicians so we have maintained those and they are doing very well. A business owner wants someone who can extract his rock, and those are the people we are turning out. We have schools of engineering, mathematics and natural sciences, natural resources, mines and minerals and a business school. Go to any institution in the country, or in South Africa or Botswana, and you will find a Copperbelt graduate.” Last but not least, the University of Zambia is the largest and most important university in the country. Founded in 1966, it has a student population of around 12,000 and a vast amount of land, which it is planning to build on. With the exponential growth of the student population in the country, UNZA has found itself in a position where infrastructure is a huge obstacle. It is therefore intending to establish PPPs both local and foreign, to develop new classrooms, office space, restaurants and clinics. Professor Stephen Simukanga, vice chancellor and specialist in metallurgical engineering, says: “Being a pioneer university, we have an established infrastructure and a huge range of courses. We run science programmes, which a lot of new universities aren’t doing as they are concentrating on economics, law and humanities. We also enjoy several links with international institutions.”
Creating the knowledge generation With its dedication to world-class learning, UNZA is the future. Now it invites the private sector to build complementary services like shops, theatres, clinics and restaurants on campus land and make the student experience second-to-none. University of Zambia Great East Road Campus, Lusaka, ZAMBIA Telefax: +260 211 251 593 | registrar@unza.zm | www.unza.zm
BancABC - a dynamic, regional bank that’s helping Zambia’s entrepreneurs bring their big ideas to light. www.bancabc.co.zm
Setting new standards for discerning travellers to Lusaka
Situated in the mining heartland of Zambia, we are maximizing our strengths in business, science and technology to become a world class institution in which scholarship thrives underpinned by robust collaborative linkages and an efficient governance system. Jambo Drive, Riverside, Kitwe, Zambia | Tel: +260 212 220 721 | www.cbu.edu.zm
Plot 19029, Great East Road, Lusaka, Zambia Tel: +260 211 368 900 info.lusaka@radissonblu.com radissonblu.com/hotel-lusaka
06 SADC LESOTHO
LESOTHO
The resource-rich Kingdom of the Skies
B
eing small and landlocked is no impediment to growth, as Lesotho, the land of 11,583 square miles and two million people, can testify. The mountainous enclave led by a coalition government that was formed in May 2012, is tackling health and poverty issues head on as it brings stability and democracy to the country for the first time since its independence from the U.K. in 1966. Shortly after his election to power, Prime Minister Thomas Motsoahae Thabane, told Business Focus, in relation to the peaceful transition to power, “We have Thomas Motsoahae gone beyond the age of miracles, but this has still been Thabane Prime Minister a bit of a miracle, beyond the efforts of many involved, looking beyond our immediate personal interests and putting the common interest first. Lesotho has shown that it is better than such politics. As a government we have a responsibility towards the people of Lesotho (Basothos) and that is providing them with a better life.” Thanks to natural resources that include water, agriculture, grazing land, diamonds, sand and clay, and sales revenues from water and remittances from the population working in South Africa, the economy has recovered strongly from the global financial crisis, with growth averaging nearly 5% per year since 2010. “The water reserves are a very important revenue generator, but we need to ensure they are invested back into the country, its economy and its infrastructure,” the Prime Minister says, adding that he is keen to recapture the enterpreneurial spirit of the country. “When I was a young man, the Basotho people owned a lot of shops. That entrepreneurial class disappeared. We need the local business community to invest more, and we need to foster partnership between the local business community and the international business community but in a mutually beneficial way. The textile industry is performing well: The Africa Growth and Opportunity Act agreement, which gives the U.S. preferential market access, will come to an end in 2015 but we want it to be extended. We are also looking for other markets. The infrastructure in that industry is competitive and we can compete internationally.”
AN INVESTMENT OPPORTUNITY WAITING FOR YOU Lesotho is Africa’s prime investment market The Central Bank of Lesotho nurtures a business-friendly environment through sustainable pricing, a stable financial sector, world-class payment systems and a local currency that is pegged to the Rand. With a wealth of natural minerals waiting to be explored, we welcome investors looking for new possibilities. Website: www.centralbank.org.ls | Email: publicrelations@centralbank.org.ls Tel. +266 22 23 2095 or +266 22 23 2139
Leketekete Victor Ketso, Minister of Finance, explains how the country is now embarking on a path of economic transformation and modernisation, competitiveness and sustainable employment. “Aside from the social factor, we are looking at the growth sectors of manufacturing, tourism, agriculture, infrastructure and trade and industry. Although the contribution of agriculture to our GDP has been declining over time, it continues to be our main livelihood. “The main issue has been that it is rain-fed: this implies drought in some periods and heavy rainfall in Leketekete Victor others, which obviously affects crops. We need to inKetso vest in irrigation so that agriculture can be developed Minister of Finance to provide the domestic market, but also be a foreign exchange earner. Traditionally, we have focused on staple crops like corn, but we want to develop commercial products such as mushrooms, fruit and potatoes.” Other revenue generators include energy and mining. Lesotho has huge potential in wind power and in the diamond-mining sector. “Today, we are finding some of the largest and best-quality diamonds in the world here in Lesotho,” Minister Ketso says. “With the right investment in infrastructure to conquer the mountains, I am convinced there are many more to be found. The newly established Ministry of Mining will go straight into exploration, not only with regards to diamonds, but also to coal as we believe we have that too, given the proximity of the coal deposits in South Africa.” The Ministry of Development Planning, meanwhile, has stressed the key focus is on partnership: “We need to promote national investors and ensure international investors undertake a transfer of skills. There is such a huge potential here. We have the resources and we can add value to everything we have. Our water and diamonds are currently there as commodities. Let’s add value to our raw materials,” it said. Economic stability is also becoming more of a reality. A solid financial framework is in place to ensure that, among other things, there is excess liquidity in the banks. Minister Ketso says: “Our economy is characterised by small and medium enterprises (SMEs). Many of these lack the collateral to apply for credit at banks but we are addressing this: the government is willing to share the risk with the banks on a 50-50 basis in order to unlock this liquidity and let it flow into the SME segment. The minister looks forward to a time when the Southern African Development Community (SADC), of which Lesotho is a member, becomes a free trade area. “This will give us the chance to enlarge the market and make it more accessible for business. A great opportunity for the region to increase economic activity,” he says. The sentiment for greater regional integration is echoed by Mrs. A. R. Matlanyane, Lesotho’s Central Bank governor. “Because we only have one neighbor, having good relations with South Africa is very important to us. SADC is coming up as a major partner to all countries that are associated with it. There are quite a substantial number of projects lined up to facilitate integration. If we want to survive in the region, Lesotho has to be part of it. Larger markets mean economies of scale and improved trade relations. “Meanwhile, like any other country, FDI is important to us. We are trying to put incentives into place to be able to attract FDI, especially since our private sector is not too well developed yet. The manufacturing sector is the main employer in Lesotho and foreign companies dominate it. We need our local companies to form partnerships with foreign companies or develop on their own. “Lesotho is a prime market. We are sitting on a goldmine that has not been explored. You see construction projects everywhere in the country. Malls are being developed as well as infrastructure and residential units. I would say that in 10 years, this economy will be a lot more mature. “I expect higher than average growth over the next five years, higher FDI and growing financial markets, including the establishment of a stock exchange. The
An independent supplement distributed in The Observer on behalf of Business Focus who take sole responsibility for its content
LESOTHO SADC 07
economy will develop into a stable one, with a good investment climate.”
Water, water Lesotho is also home to one of the biggest engineering projects in Africa at the moment. The Lesotho Highlands Water Project, an ongoing concern with a hydropower component, has been developed between the Lesotho and South African governments and will comprise a system of several large dams and tunnels throughout the two countries. Its purpose is to provide Lesotho with a source of income in exchange for water to the central Gauteng province; South Africa’s industrial heartland, as well as generating all of Lesotho’s hydroelectric requirements. The estimated cost is $8 billion. Refiloe Tlali is chief executive of the Lesotho Highlands Development Authority, and is currently getting ready for the second phase of the project. “This is a major driver for Lesotho’s economy,” she says. “During the Phase 1 construction, Lesotho had its highest economic growth in a long time; I think we reached around 9% growth. As we speak, the feasibility studies are not yet complete for the financing of the whole project. We need to finalize this first. Financing for the first phase came from the World Bank and the European Development Bank. We identified four different areas that are now nature reserves, which will be great drivers for the tourism industry. Phase 2 offers tremendous possibilities for the private sector, for consultancy firms and construction firms. There is a huge auxiliary economy around the whole project.” Two major examples of successful private sector investment in Lesotho include telecommunications company Econet Telecom Wireless, and tourism operator Sun International. For Econet, in Lesotho since 2008, the new government has been a revelation, “a showcase for democracy that should give investors an upbeat view,” says Nico Heyns, CEO. “People are hungry for services to be delivered and I think that will keep new government under pressure. In terms of ICT, Lesotho is challenging in that it is very mountainous and there are remote areas with low population density that are not profitable in terms of development. Vodacom, the other teleco, and Econet have achieved very good coverage so far: we have about 60% of the country covered and we have started looking at site-sharing to be more cost effective.
Katse Dam.
www.lhwp.org.ls
“There are plenty of opportunities here for manufacturing. There is also an opportunity to build call centers. The workforce is highly educated and English speaking and there are university graduates that can enter and climb the corporate ladder with an international organization. Data management is another option.” Finally, operating the two major hotels in Lesotho’s capital Maseru, Sun International has been lucky to attract the lion’s share of tourism coming to the country. “The Lesotho Sun, which has a casino, and the Maseru Sun are the only two hotels that would meet the needs of an international traveler looking for quality accommodation,” says Martin van der Breggen, Sun International Lesotho’s area general manager. “The Lesotho Sun underwent a 140 million Rand upgrade just a few years ago and is focused on the high-end traveller, while the Maseru Sun has more of a family atmosphere. I have put a lot of effort into working with tour operators to attract the large coaches to Lesotho, focusing on at least a one-night stay. This can be included into the package holidays people take when travelling to South Africa. We need to put Lesotho on the map. This country is a gem waiting to be discovered.”
Situated on a hill overlooking Lesotho’s capital, Maseru, the Lesotho Sun is designed to give guests spectacular views across the city towards faraway mountain landscapes. The elegant and stylish bedrooms and suites are decorated to give a chic feel and are equipped with all the comfort and facilities of a first-class international hotel.
LESOTHO SUN Hilton Road Maseru 100, Private Bag A68, Maseru 100 Lesotho, Lesotho Tel: +266 22243000 | Fax: +266 22310104 | www.lesothosun.co.za
Inspired to change your world
Invest in their future There are a million and one reasons to invest in Lesotho now. We invite private investors to join us as we strive to reduce poverty levels through increased national and household incomes, economic growth, domestic production, employment, wealth and investment.
By thoroughly modernising its products and services with next generation network (NGN) technology, Econet has brought unlimited options to Lesotho. PO Box 1037, Maseru - 100, Lesotho T: +266 22 21 1000 | F: +222 22 31 0308 customercare@etl.co.ls | www.etl.co.ls
Ministry of Finance Finance House High Court Road, Maseru - 100, Kingdom of Lesotho Telephone: +266 2232 3703 | Fax: +266 2231 0157 | www.finance.gov.ls
08 SADC SOUTH AFRICA
SOUTH AFRICA
Tackling the energy challenge head-on
W
ide open, modern and alive with possibilities, South Africa has been experiencing tremendous growth over the past decade, but one of its biggest challenges is a shortage of electricity. Three new power plants are being built to keep up with demand, while a comprehensive blueprint for the future, the integrated resource plan (IRP), details an energy mix, that includes 43% renewable energies and 23% nuclear power by 2030. “We have just started building more in terms of delivering supply,” says Dipuo Peters, who was Energy Dipuo Peters Minister until July. “Between 1994 and 2005, we did Fmr. Minister of Energy not invest in infrastructure for power because at that time we were told that we had a 30% surplus. But when the policies commenced about universal access and free electricity for, in particular, the black majority, we realised that we had a short supply and hence the investment in energy. “In 2010/2011, we produced the IRP because we wanted to look at a long term energy planning scenario. Energy is not something that you can wake up to and say we will have it. You need to plan in advance. So our plans are focused on doubling our supply of energy. We also started revaluating older plants that were being decommissioned and have already returned several of them to service. Overall, our investment in both planning and construction in power generation reassures investors in South Africa that the energy supply will be adequate to meet the demands of our economy. “We have a policy for IPP (Independent Power Producers), because we need to strengthen the hand of Eskom but also allow for the private sector to participate. This is why we have the regulations for IPP and we also have different instruments to make it possible for IPPs to invest in South Africa.” With nuclear power being an important part of the mix, the Minister asked the International Atomic Energy Agency to assist with stress tests of all of South Africa’s existing reactors. “South Africa has more than 60 years’ experience with nuclear power, but we asked for an independent mission to review our facilities. This is an indication of our confidence and the transparency that we believe in. “There are a lot of factors that will determine whether the nucear part of the IRP Plan moves forward or not. Cost is an obvious factor. The 23% also speaks to the industrial action policy plan. We would want to see massive industrialisation out of this. We have NECSA—the state-owned company responsible for undertaking and promoting R&D in the field of nuclear energy and radiation sciences—and various nuclear forums where we engage with the academic sector and the construction sector, to share information and debate issues. Those involved in the steel industry
are asking about the requirements from the nuclear programme in terms of steel production. We want the indirect industries that will be involved in the nuclear building to be prepared also.” Last year, the government opened a training centre in NECSA, and many young people are already receiving training. There is also a public information centre to demystify nuclear energy, and help people understand the positive applications of nuclear—for example in agriculture and the medical sphere. Phumzile Tshelane, CEO of NECSA explains why Phumzile Tshelane nuclear is such an important fuel. “More than 80% of CEO, NECSA our electricity supply comes from coal,” he says. “We do not have as much hydro as other localities in the world. In fact South Africa is a semi-arid country with limited rainfall, so our rivers are small. And because we are so far from the gas fields, gas is not a prominent player here. As our result, our base load energy production is limited. Our primary sources are limited to coal and nuclear. So if we want more balance we need to increase the component of nuclear into the grid. “Many of the industries here in South Africa are energy intensive, and there is an intermittent supply of renewables. So you will have the issue of base load. In terms of our base load sources, coal will remain a very dominant player here but nuclear will have to increase from the current 5% to a higher share of the market. You cannot drive mining and heavy-industry factories if you don’t address base load. “The IRP talks about 9.6 gigawatts of nuclear to be added by 2027, but I think 2030 is much more realistic. You would need to embed some of the technologies into the country. You need to industrialise at the back of building this 9.6 gigawatts and to do that you need institutions that can manufacture. NECSA is leading that charge in terms of preparing for the manufacture of components of the nuclear power programme. We have recently got an ASME III certification which is a very important card to play in this area. “The most significant opportunities are during construction, where a lot of technology is required that South Africa does not have. We will be buying from vendors who are established. And a lot of experience is had by foreign individuals, British and French, in the construction and operation of nuclear power plants. So we want to have strategic partnerships with such entities. We would of course be asking them to train our people, and this of course does not happen for free. Therefore there is potential there for business exchange. There is also potential for shareholding in some South African companies. Partnerships will be good in order to ensure the transfer of knowledge and skills. They will also help ensure that here in the tip of Africa we are fully exposed to international best practice. We are going to also ensure we are interacting with universities and training institutions.”
The eyes that doctors see you through South Africa’s nuclear energy corp Necsa also engages in commercial business. Through subsidiaries NTP Radioisotopes, which sells a range of radiation-based products and services for healthcare, life sciences and industry, and Pelchem, which supplies fluorine and fluorine-based products, it earns valuable foreign exchange for the country. Necsa Tel: +27 12 305 4911 | www.necsa.co.za