Enterprise Africa July 2018

AFRICA

THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS

July 2018

www.enterprise-africa.net

Lesotho’s Leading Bank Takes

Digital Strategy

Exclusive interview with Standard Lesotho Bank’s Chief Information Officer, Samuel Koatla

ALSO IN THIS ISSUE:

Biovac / Fidelity ADT / Swartland / Tourvest

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EDITOR’S LETTER EDITOR Joe Forshaw  joe@enterprise-africa.co.za SENIOR PROJECT MANAGER Sam Hendricks  sam@enterprise-africa.co.za PROJECT MANAGER Shannon James  shannon@enterprise-africa.co.za PROJECT MANAGER James Davey  jamesd@enterprise-africa.co.za PROJECT MANAGER Jake Megeary  jake@enterprise-africa.co.za PROJECT MANAGER Alex Williams  alex@enterprise-africa.co.za PROJECT MANAGER James Redwell  james@enterprise-africa.co.za FINANCE MANAGER Emily Taylor  finance@enterprise-africa.co.za SENIOR DESIGNER Liam Woodbine  liam@enterprise-africa.co.za CONTRIBUTOR Manelesi Dumasi CONTRIBUTOR Karl Pietersen CONTRIBUTOR David Napier CONTRIBUTOR Timothy Reeder CONTRIBUTOR Colin Chinery

//

Creating a sustainable manufacturing sector, capable of meeting international standards, and building export competences is a key component of President Ramaphosa’s strategy to attract investment to South Africa. And it looks like it is working following the announcement from Mercedes-Benz that it would invest R10 billion into its Eastern Cape manufacturing plant.

But there is another perhaps less well-known company looking to boost its manufacturing ability in order to grow an export market.

Our lead feature for July comes from healthcare manufacturing business Biovac. The Cape Town-based company develops and manufactures vital vaccines that immunise against deadly diseases.

A recent partnership between Biovac, and American company PATH will see Biovac manufacture a GBS vaccine for export around Africa.

CEO, Dr Morena Makhoana is excited about the potential for the company and tells Enterprise Africa that his hope is to become a multi-geographic, multi-disciplinary, South African healthcare manufacturing business that works for local and international markets.

We also hear from Standard Lesotho Bank about the company’s move towards a digital future. CIO, Sam Koatla tells us that he sees big opportunities for growth in a country which still lags behind international uptake standards when it comes to digital banking.

And then there’s Graysmaker Advisory, an investment business with a unique offering for local and international investors, that is helping to drive Southern Africa’s renewable energy scene.

All of these businesses are helping to bring FDI into Africa, and boosting the industries and communities in which they operate.

Get in touch and tell us about how your business is drawing the eyes of the world to the continent, we’re online @EnterpriseAfri1

Joe Forshaw Published by

EDITOR

Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU Administration & Finance +44 (0)20 7193 0419 Advertising & Feature Sales +44 (0)20 8123 7859 Editorial & Design +44 (0)20 7193 2735 E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/or in advertisements included in this magazine do not necessarily represent those of the publisher. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Media Group Ltd 2018

GET IN TOUCH  +44 (0) 20 8123 7859  joe@enterprise-africa.co.za www.enterprise-africa.net

www.enterprise-africa.net / 3

06/NEWS: The News Snapshot A round up of some of the latest news stories from around the country

82/EXHIBITION CALENDAR: Key Upcoming Events Across the Country Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors

8/STANDARD LESOTHO BANK Lesotho’s Leading Bank Takes Digital Strategy Standard Lesotho Bank’s Chief Information Officer, Samuel Koatla tells Enterprise Africa that the bank will be pursuing a digital strategy in order to boost growth.

“One thing that all banks are looking at is the ability of mobile devices,” he says.

8/ 4 / www.enterprise-africa.net

CONTENTS

35/

53/

60/

INDUSTRY FOCUS: FINANCE

INDUSTRY FOCUS: TOURISM

8/STANDARD LESOTHO BANK Lesotho’s Leading Bank Takes Digital Strategy

45/TOURVEST DESTINATION MANAGEMENT Proudly South African Tourvest Enjoys Global Success

16/ZAMBIA NATIONAL COMMERCIAL BANK Half A Century of Financial Innovation

INDUSTRY FOCUS: SECURITY

INDUSTRY FOCUS: INVESTMENT

INDUSTRY FOCUS: MANUFACTURING

20/GRAYSMAKER ADVISORY Boutique Investment Advisory Firm Drives African Development

60/SWARTLAND Opening the Door of Opportunity

INDUSTRY FOCUS: AGRICULTURE 28/AFGRI AGRI SERVICES AFGRI Embracing Digital Farming Revolution INDUSTRY FOCUS: MEDICAL 35/THE BIOVAC INSTITUTE Biovac to Produce GBS Vaccine in Cape Town

53/FIDELITY ADT Fidelity ADT: Always There For You

67/MACNEIL PLASTICS Long Lasting, Superior Quality From MacNeil Plastics INDUSTRY FOCUS: MINING 72/LETŠENG DIAMONDS New Letšeng CEO Celebrates 910 Find INDUSTRY FOCUS: AVIATION 79/SOLENTA AVIATION The African Sky Is No Limit for Solenta Aviation www.enterprise-africa.net / 5

SA SIGNS AFRICA CONTINENTAL FREE TRADE AREA

MERCEDES-BENZ’S R10BN INVESTMENT GETS PRESIDENTIAL THUMBS UP

AGREEMENT South Africa has signed the African Free Trade Area (AfCFTA) agreement with the African Union, which will pave the way for the country to benefit from inter-regional trade within the African continent.

“This agreement is an important step towards South Africa’s participation in a market of over one billion people and will create opportunities and many benefits for South Africa, which would enable South African companies to export goods and services across the continent.

“It will contribute to the growth and diversification of our economy and therefore create jobs, as well as reduce inequality and unemployment,” said President Ramaphosa.

The President signed the agreement during the AU Summit that took place from 1 – 2 July 2018 in the Republic of Mauritania under the theme “Winning the Fight against Corruption: A Sustainable Path to Africa’s Transformation.”

“South Africa remains committed to a coordinated strategy to boost intra-Africa trade and to build an integrated market in Africa that will see a market of over one billion people and approximately $3.3 trillion in GDP. “New markets in West Africa and North Africa will provide opportunities for the export of South African products. To date, the agreement has been ratified by six countries, namely Chad, eSwatini, Ghana, Kenya, Rwanda and Niger,” said the President.

The agreement will soon be submitted to Parliament as part of the process towards its ratification.

6 / www.enterprise-africa.net

President Cyril Ramaphosa says the cash injection by Mercedes-Benz in South Africa is proof of its confidence in the economy.

“The decision by Mercedes-Benz to further increase its investment in South Africa is a firm statement of confidence in the country and its economy.

“It is a statement about the skills that are available in South Africa and those that can be developed,” said the President.

Last month, Mercedes-Benz unveiled its R10 billion investment into its Eastern Cape plant.

The investment will see the car manufacturer produce its latest range of the luxury C-Class cars.

“With the investment of 600 Million Euro (R10 billion) we are significantly expanding our plant in East London and equipping it for the future. The decision to have the new generation of the C-Class built in East London re-affirms the plant and Mercedes-Benz South Africa.

“The investment is also a sign of our commitment to South Africa and efforts to revive economic growth as well as the socioeconomic development of the East London region,” said Member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain, Markus Schäfer.

President Ramaphosa, who visited the Mercedes-Benz Learning Academy prior to the official investment announcement, hailed the automotive

group’s efforts to improving the skills of the youth through its apprenticeship and learnership programmes.

“We say this is an investment in people because it deepens the commitment that Mercedes-Benz has to developing skills and nurturing talent.

“It understands that for its business to grow, for it to keep pace with rapid changes in production methods, it needs to train new entrants and continuously upgrade the skills of existing employees,” said the President.

President Ramaphosa said the Mercedes-Benz investment should send a clear signal to investors around the world that South Africa is “more than capable of sustaining an advanced manufacturing sector” and doing so profitably and sustainably.

“We are also determined to lower manufacturing costs by, among other things, significantly improving Eskom’s financial and operational performance, aligning port and other tariffs with our industrial strategy and sustaining investment in rail and road infrastructure.

“Through the development of special economic zones and industrial parks, we are putting in place the necessary infrastructure and support for a manufacturing boom. We are working to ensure it is easier to invest and do business in South Africa,” said Ramaphosa.

NEWS SNAPSHOT COMPANIES URGED TO EMPLOY YOUNG GRADUATES Businesses in South Africa have received the Presidential call asking for companies to go out of their way to employ young graduates as a way of growing the economy.

“On this Youth Day, we call on all companies – both in the public and private sector – to make a deliberate effort to seek out unemployed graduates and employ them,” said President Ramaphosa.

Addressing his first Youth Day commemoration since taking over as Head of State in February, President Ramaphosa said the employment of young graduates will not place a great burden on individual companies.

“But if taken up on a large scale, such a call could significantly reduce youth unemployment, while bringing much needed skills and capacity into the economy. Employers need to understand that for our country to succeed, for their businesses to thrive, they must take responsibility for providing young people with the work experience they need.”

GAUTRAIN PROJECT TO CREATE MORE JOBS The Gautrain extension project has the capacity to create more than 211,000 direct jobs, says Gauteng MEC for Roads and Transport Ismail Vadi.

Delivering his budget vote in the Gauteng Legislature, he said R1.6 billion is the estimated potential spend on skills development, enterprise development and supplier development.

“Passenger demand for the Gautrain has exceeded projections, especially in the peak periods and has resulted in overcrowding and stifled demand. It is therefore necessary to procure more trains

and invest in the system so that these trains can run efficiently over the next 10 years,” the MEC said.

The Gautrain Management Agency (GMA) has developed a business case within existing funding parameters for Gautrain and has partnered with the Development Bank of Southern Africa (DBSA) to arrange for the financing for 12 new trains.

“The capital expenditure for additional rolling stock and supporting infrastructure is expected to sustain about 10,000 jobs in Gauteng. The total government revenue is expected to increase by an estimated R542

million in nominal terms between 2019 and 2023,” Vadi said.

The GMA has completed the feasibility study for the extension to the existing Gautrain network.

The study was submitted to National Treasury for approval in April 2017. Since then the GMA, Provincial and National Treasury have had engagements to discuss the project in detail.

A decision on the awarding of Treasury Authorisation (TA 1) for the project is expected in the latter half of 2018. Once approval has been granted the planning and Environmental Impact Assessment of Phase 1 will begin.

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STANDARD LESOTHO BANK

Lesotho’s Leading Bank Takes

Digital Strategy PRODUCTION: Karl Pietersen

Standard Lesotho Bank’s Chief Information Officer, Samuel Koatla tells Enterprise Africa that the bank will be pursuing a digital strategy in order to boost growth.

“One thing that all banks are looking at is the ability of mobile devices,” he says.

8 / www.enterprise-africa.net

INDUSTRY FOCUS: FINANCE

//

Standard Lesotho Bank is going through something of a transformation. The largest bank in the small African nation is targeting growth as a digital provider, something which the dispersed and often rural population will surely benefit from.

The opportunities for digital banking providers are big. Of the country’s 2.2 million people, just 20% are active internet users. However, around two million active mobile subscriptions exist and servicing clients through mobile channels is where Standard Lesotho sees potential.

“There is no longer a question on whether we partner with MNOs

10 / www.enterprise-africa.net

(mobile network operators), the question is how do we partner with MNOs and think tanks,” says Chief Information Officer, Samuel Koatla.

His vision is clear – move the bank’s business online, but ensure it remains in reach of everyone who needs it; create partnerships with the country’s leading tech businesses and pull in market share, while all the time delivering the first-class service that you would expect of the country’s leading financial organisation.

“The uptake is ok. It is not where we want it to be,” Koatla says of the company’s digital strategy.

His idea is to have an industry leading online banking system paired

with a speedy and efficient app, supported by a network of traditional branches with digital capabilities. But, ensuring no one is neglected, all of this will be underpinned by a basic service provision delivered through USSD (Unstructured Supplementary Service Data) channels.

“We have to make sure we align ourselves to our customers in terms of what access they have to technology,” he says. “One thing that all banks are looking at is the ability of mobile devices. That is the direction that we are taking, and we are developing for both feature phones and smart phones.

We are available on both phone types and we have USSD, internet banking

STANDARD LESOTHO BANK

// WE ARE THE BIGGEST BANK IN THE COUNTRY AND OUR CLOSEST COMPETITOR ONLY HAS HALF OF THE ATMS THAT WE HAVE // and a smart app. That covers all phones and all devices.”

Koatla wants unanimous quality across all platforms. Any services that are not available on certain devices will soon be made available so that access is as universal as possible.

“On USSD, a platform that does not require internet access, the uptake has been great as its possible to reach all of our customer segments very easily. Whether you’re in an urban area or rural location, as long as you have a phone, you can access our services,

so the uptake through USSD has been very good.”

However, the adoption of internet banking has not been as impressive.

“For whatever reason, we are still struggling in terms of internet banking.

We thought that of the thousands of people with internet access, at least 80% would use our internet banking service but we are hovering at just 30-40%. This means we still have a long way to go,” says Koatla.

He puts this down to the infancy of digital services in the country,

where usage increased by 78% between 2016 and 2017 and just 9% of that growth coming from laptops and desktop computers.

DIGITAL BRANCH NETWORK Across Lesotho’s almost 12,000 square miles, Standard Lesotho Bank has 17 branches. Strategically positioned to offer country-wide coverage, the branch network is one of the strongest in the industry.

Koatla says that no more physical branches will be opened at this stage;

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INDUSTRY FOCUS: FINANCE

// WE WANT A MIXTURE OF OLD BANKING SERVICES AND CONTEMPORARY DIGITAL SERVICE IN BRANCH // instead, the company will invest in its existing network and add more ATMs to its portfolio. Currently, there are 93 Standard Lesotho ATMs available and more will be added before the end of the year.

“We are the biggest bank in the country and our closest competitor only has half of the ATMs that we have,” explains the CIO. “What is now and issue, and something that is being pushed by the government, is that we must create financial inclusion. This means we must put ATMs in places where we are not going to make much money.

“In places where banking services are not readily accessible, we will place ATMs so that we can bring service to the people. We are looking at adding four or five ATMs this year

and those will be in much more rural areas of the country.”

Investing in the branch network to bring the buildings in line with company expectations is already underway and has given Koatla the opportunity to install digital services in branch for increased efficiency.

“In terms of the branch network, we are moving towards digital branches. We have recently opened a new digital branch close to the National University of Lesotho and people are very happy as they can access services that were previously unavailable. That is the first digital branch and the idea is that we put it close to the students,” he says. “We are also looking at the prospect of mobile branches as the Lesotho economy is driven by construction, diamond

mining, and natural resources, so there are new start-ups focussing on these industries and we want to provide services to these enterprises. We want to have a mobile digital branch that we can put close to our customers and serve people there. In terms of old brick and mortar branches, we are renovating and making sure our network is able to offer a 24/7 digital service as well. We want a mixture of old banking services and contemporary digital service in branch.”

Investment of this type is all intended to feed into the digital strategy.

This strategy has been developed to bring as many people as possible into the financial sector, benefitting the individual and the business.

“Around 40-60% of our population use banking services,” admits Koatla.

// ECONET Telecom Lesotho (ETL) ECONET Telecom Lesotho (ETL) is at the core of Lesotho’s economy. Econet has the longest fibre optic network in the Mountain Kingdom and is the supplier of choice for most business customers.

Lebohang Ramaisa, General Manager Enterprise Business, says over and above ETL’s and fiber network in the country, it is the diverse range of business solutions it offers, that has positioned it as the partner of choice to businesses and government.

“The financial services providers, like our partner, Standard Lesotho Bank, have special demands for availability, security and speed. Econet supplies all of Standard Bank’s in-country connectivity and has helped Standard Lesotho Bank maintain the highest level of availability compared to all other Standard Bank group companies in Africa.”

Ramaisa adds. Econet also provides secure connectivity to the bank’s point of sale (POS) terminals across the country using its 3G and LTE network.

Further, Standard Bank’s internal voice communication depend on a VoIP platform that is designed, installed and supported by Econet Telecom Lesotho. Econet has further partnered with Standard Lesotho Bank in their digital transformation journey by providing Internet services for their banking websites, their Office operations and WIFI in their branches. Our innovative collaboration as includes mobile banking where our common customers are able to send money from their bank accounts to thier Ecocash mobile money wallets.

Econet’s extensive fibre network reach has helped, not only Standard Lesotho Bank and the government but it has helped the growth of local economies in the deep valleys and mountains of Lesotho. Econet is a proud partner of Standard Lesotho and is inspired to change the lives of the citizens of this beautiful mountain kingdom.

12 / www.enterprise-africa.net

T’s & C’s apply

www.etl.co.ls

INDUSTRY FOCUS: FINANCE

“Looking at those who are not active with banking, it’s not that they don’t have access to funds – they are still spending – it’s just that they are using cash and not going to the bank.

There is a thought that banks can be more expensive, but our central bank has said all banks must offer services to everyone, no matter of their circumstance.

“This presents a major opportunity,” he adds. Currently, there is more than 800,000 people who are ‘unbanked’. Bringing these groups into the market would increase the size of the market significantly.

“For years, there were no banks coming from South Africa, but we are

hearing that many more banks now want to enter the Lesotho financial market. They see the opportunity as we do. We have around 60% market share and for the past two to three years we have seen the younger generation moving to banks with a strong digital offering and that is why we are investing heavily in our digital presence.”

ROOM FOR IMPROVEMENT At the end of 2017, Standard Lesotho Bank released a mix set of results.

The company’s headline earnings sat at M240 million, but this was down from M310 million in 2016 – a drop of 23%. Declines like this are obviously unsustainable and Koatla says that

// WE HAVE SEEN THE YOUNGER GENERATION MOVING TO BANKS WITH A STRONG DIGITAL OFFERING AND THAT IS WHY WE ARE INVESTING HEAVILY IN OUR DIGITAL PRESENCE // 14 / www.enterprise-africa.net

the dip forced difficult board room discussions.

“We recently talked in the boardroom about how this could potentially be a reality check for the business and the country. We used to register big profits. Our ROE was 36-39% and we never asked whether that was sustainable. Now, our ROE sits at around 26% while other banks in Lesotho and other countries around Africa hover around 19%. We do not accept that, and this is why we are investing in a digital strategy to boost growth.”

The cause of the dip? According to Koatla, an economic landscape influenced by political factors.

“We moved from a oneparty government to a coalition government and that was new concept in the country,” he says. “The first coalition only ran for two years and we had elections again, then another government ran for two years

STANDARD LESOTHO BANK

before further elections. During that period, the government did not inject any spending into the economy and the circulation of money slowed. This is why we suffered, but it was not only Standard Lesotho Bank that was hit.

All commercial banks suffered.”

Standard Lesotho’s overall performance was not bad. Fees and commission revenue was exceptionally strong and resilient, recording 8% year-on-year growth.

This was despite ongoing investment into a new Finacle Core Banking system – another step towards improved digital functionality.

“We finished that project in March 2017 and we are now actively running on Finacle. The project was closed in December and we still face challenges, but it is a fantastic platform which gives our customers great service and great opportunities. It also gives us a competitive edge as it is better than what is available elsewhere in the market.”

BUILDING SMES A key focus area for Standard Lesotho in terms of building its customer base will be with SMEs. Big creators of jobs and important builders of GDP, Lesotho’s SMEs are a vital part of the economy but often need support.

“We noted that most of our deposits come from SMEs and if we really want to create employment (our unemployment rate is very high in Lesotho), we must partner with the private and public sector to create opportunities.

“We have opened our business banking suite for SMEs to use for free, there’s internet and a boardroom for free, there’s office space for free, and you can meet your prospective clients while using our services.

“We are also investing heavily in training; we have spent several millions on training to help SMEs run their businesses. We started this year and the applications have been huge. We will start with 10 and expand as we get used to the programme.”

SMEs developed, grown and run by young people is also a focus for both the government and the bank.

“We have started Bacha Enterprises, the Sotho word for youth.

This has been running for four years now and we are partnering with the Lesotho Revenue Authority and the Basotho Enterprises Development Corporation. Through this, we are funding ideas from youth which are most likely to flourish. We have given around 12 start-ups funding, and we think that is an important story to tell,” says Koatla.

Bacha Enterprises intends to breed a crop of entrepreneurs who can inspire change and prosperity by becoming the creators of jobs and not job seekers. This project sets the stage for the youth to shape and determine the economic agenda of their country.

The project is targeted at graduates who have completed their first degree qualification or higher and have never had any opportunity of any type of formal employment after attaining

their qualifications.

While building prosperity externally, Standard Lesotho does not lose focus of building capabilities within. Employing some 800 people, this is one of the strongest employee bases in the country. But it requires constant input. Internationally respected skills are hard to come by, especially in the field of app development.

“We are forced to look into South Africa for these skills,” admits Koatla. “We are advanced with website development but with app development, we look abroad to South Africa or India or the tech countries of the world. Unfortunately, the skills are not there in Lesotho.”

It’s a constant and ongoing battle, but one which is comes expected for all organisations looking to lead in their chosen industry. “We look to the universities to develop these types of skill but many are running old curriculum and that does not help. We have to invest heavily and build people from scratch and then it becomes a tough fit to keep those skills.”

In the future, ambitions are big and optimism is high. However, the building of sustainable relationships is key. “The biggest challenge is MNOs with mobile money systems,” says Koatla. “They are entering the banking space and we are looking at our next step. Do we try and do everything ourselves which is unsustainable?

Or do we create partnerships? MNOs need liquidity and a banking partner and we can provide that. We are in a stage saying what do we give out and what do we keep to ourselves, so it is a challenging situation.”

Asked for his feelings on the future for Standard Lesotho Bank and the for the country: “There are big, exciting opportunities” Koatla concludes.

WWW.STANDARDLESOTHOBANK.CO.LS

www.enterprise-africa.net / 15

ZAMBIA NATIONAL COMMERCIAL BANK

Half A Century of

Financial Innovation PRODUCTION: Timothy Reeder

Founded in 1969 by the country’s government, Zambia National Commercial Bank (Zanaco) is a commercial bank with a comprehensive service offering including loans, savings and investments. Alongside these, an unerring policy of constant innovation has led to a number of key firsts for the bank and a customer base spanning the entire territory, as it nears its 50th year of operations.

//

Zanaco is a major financial services provider in Zambia, with the bank’s total assets as of December 2017 valued at some ZMW 9.543 billion (US$961 million).

Prior to 2007, the bank was fully owned by the government, in which year 49% of its shares were sold to the Rabobank Group, a banking company from the Netherlands, and listed on the Lusaka

16 / www.enterprise-africa.net

Stock Exchange the following year.

2017 brought shareholders’ equity of ZMW 1.024 billion (US$103.1 million), with the bank’s network numbering branches, agencies and over 100 ATMs across the country.

COUNTRYWIDE COVERAGE Zanaco’s footprint has grown to encompass nearly the entirety of

Zambia. At its in inception in 1969 the bank set out to be the leading retail outfit in the country, and realised from the outset that this would only be achieved through the provision of comprehensive financial services to the whole of the Zambian public.

Zanaco is certainly the bank that can claim to be closest to its customers: its 180 branches are to be found in 74 of

INDUSTRY FOCUS: FINANCE

Zambia’s 84 districts, and in all 10 of its provinces.

In addition to its own vast branch network, Zanaco has partnered with the Zambian post office, ZamPost, to allow Zanaco customers to deposit and withdraw funds from their accounts at Zampost outlets. These total around one hundred and are distributed all over Zambia, in both rural and urban locales.

Quite apart from its banking concerns, Zanaco has homed in on football’s universal appeal, which is felt perhaps nowhere more keenly than in Zambia, in the form of its Lusaka-based Zanaco Football Club.

Formed in 1978 as a social team by management trainees of the bank, as of the 1980s Zanaco FC began to grow steadily from being these humble beginnings to one of the most successful and decorated clubs in Zambian football history. In recent years the club has won seven Super League trophies, four Charity Shields and one Coca-Cola Cup, to name but a few.

18 / www.enterprise-africa.net

WAY AHEAD OF THE REST “Today, we want to connect the dots for you.” This is the mission statement underpinning Zanaco, both headquartered and with its main branch in in the central business district of Lusaka, Zambia’s capital and largest city.

“Zanaco’s journey and evolution has been about innovation and constant change,” says the bank.

“We have always been about innovation - we were the first to introduce ATMs in this country - while not a lot of people realise this, but we were also the first to launch agency banking, which keeps evolving and getting better by becoming nearer to and more convenient for our customers.” Zanaco’s work has been largely credited with turning Zambian banking from what was previously a time-consuming and confusing chore, to something of a pleasure.

Mobile banking services have been central to this shift in consumer attitude, by reducing transaction costs, improving payment systems and helping customers to avoid the often-

frustrating experience of the traditional banking services. Zanaco was on hand to release one of the first, and certainly the most popular, m-banking solutions in the country.

“2008 was a milestone year for us,” Zanaco admits. “We launched the Xapit instant banking platform, an innovation that changed the face of banking throughout the nation as the first product of its kind.” Xapit succeeded in enabling customers to check balances, carry out mobile and inter-account transfers, pay bills and manage their accounts. “With the mobile phone transactions, the bank was breaking the barriers of traditional banking to make it more convenient, accessible, fun and cheaper,” observed Mizinga

// ZANACO’S JOURNEY AND EVOLUTION HAS BEEN ABOUT INNOVATION AND CONSTANT CHANGE //

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In emerging markets such as Zambia, mobile technology is transforming access to banking services for people living in both rural and urban areas. Zanaco is also replacing its ATMs with new money deposit equipment features, which, says Chief Commercial Officer Lishala Situmbeko, will allow the bank to reposition itself to meet customer needs and facilitate 30% of banking transactions at ATMs in the short to medium term. “Customer

// CUSTOMER REQUIREMENTS HAVE EVOLVED, AND WE JUST HAVE TO MOVE WITH THE TIMES //

requirements have evolved, and we just have to move with the times,” she said.

“Customers need innovative products and in response we are offering efficient and tailor-made solutions and services.”

FRESH PLANS FOR GROWTH “As we look to the future, our focus remains on being committed to continuously evolving and repositioning ourselves in order to become even more accessible to our customers,” sums up Zanaco as it bids to solidify its position at the top of Zambian banking. Just this year the bank refreshed its brand with a promise to support the growth of its customers, businesses, communities and the national economy, as it pursues its journey to become the top transactional bank in Zambia by 2020.

“We relooked at our responsibility to the people in communities that we serve, as well as to the people of

Zambia,” said Zanaco Board Chairperson, Ms Charity Lumpa. “We decided that we are going to be relevant in your lives by being your preferred and trusted partner in growth. It is no wonder, therefore, that we are committed to supporting you, our communities and the nation of Zambia to grow.”

“We realise that, in order to meet our customers’ evolving needs, we have to be modern in our delivery of banking services,” concluded Zanaco Managing Director and CEO, Henk Mulder. “As a progressive bank, we are moving with time and creating strong digital platforms that characterise modern banking. We created a dedicated digital department that is driving our robust digital banking platforms,” Mr Mulder said.

WWW.ZANACO.CO.ZM

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GRAYSMAKER ADVISORY

Boutique Investment Advisory Firm

Drives African Development PRODUCTION: Karl Pietersen

A specific focus on energy infrastructure, water and innovation has allowed Sandton-based investment advisory firm, Graysmaker, to develop a unique project portfolio which is attracting the attention of local listed and international investors.

//

When Peter Oldacre returned to his homeland, South Africa, after a spell working in London, his vision was clear. The investment space surrounding energy infrastructure was underserved and an anticipatory investor looking for returns over the long term could be rewarded. There were pockets of the market which had been ignored, or not yet explored. Particularly with renewable energy and low carbon energy generation. Like all successful entrepreneurs, he saw a gap in the market and quickly went about exploring the opportunities.

Oldacre’s strategy took 10 years to mature and Graysmaker Advisory was established in 2016 as a boutique investment and advisory firm in Africa,

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with a focus on infrastructure and development in the water, food and energy sectors. With Oldacre and an established leadership team at the helm, Graysmaker discovered a unique opening for investors looking for chances in Africa and has exploited those chances for realised returns.

“In 2006, I had just returned to South Africa from the UK as a hedge fund trader,” explains Oldacre. “I managed to build a fund for a family office over the previous nine years and I got an opportunity to return to South Africa into a part of the economic sector that was in its infancy in South Africa and arguably developed into a world-class investment opportunity. It was the low-carbon energy generation environment. My first degree was

in science and I completed that but realised that I wasn’t ever going to be the next Stephen Hawkins or even the next Jim Hawkins, without understanding the financial and commercial aspects of where science is applied.

“The low carbon environment and the potential for repeatable and sustainable investment struck me in 2006, like I’m sure it has stuck thousands of people, and I realised there was something going on that was academic in nature, and therefore able to understood, with no select few controlling the information, that was potentially on the way to becoming commercially exploited.

“In 2006, we saw that the low carbon environment wasn’t suitable

INDUSTRY FOCUS: INVESTMENT

for African characteristics. Africa at the time, and even today, is largely already theoretically a low carbon environment and much that was “western” in terms of approach and technology was simply not applicable to our needs, and at the risk of being considered as conspiracy driven, was sometimes absolutely illconsidered as an investment approach.

“Locally in South Africa, after working on over a Billion US Dollars of plant and technology, and as returns started to narrow to very close to the cost of capital, we started to investigate the value chain and realised that there was an infrastructural investment play that was available in the renewable energy sector that was absolutely under-exploited, and as all good hedge

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fund managers are prone to do, we analysed it from all angles, to determine the risks and the potential for returns to our clients.”

Graysmaker spotted that an opportunity lay in among the complicated, intricate and intertwined value chains that make up an investment prospect.

LAND LEASE Oldacre was well-versed in the African renewable and IPP (Independent Power Producer) environment following spells with Deloitte SA and SkyPower Global. He had been through the process of project origination, project development, investment development, construction and commissioning and

longer-term asset management of large scale infrastructure projects, and specifically various renewable energy projects. Along with his team, Oldacre identified the land leases that underpin the entirety of any energy project as an investment opportunity which follow an investment structure very similar to the actual investment into the renewable project itself, but with less upfront risk to money. Essentially, a land owner will be approached by an energy company and offered money for a lease on the land to build a solar or wind energy plant. Graysmaker saw the value in these land leases and weighed that value with the level of risk involved. A positive outcome means that Graysmaker is now acquiring for

GRAYSMAKER ADVISORY

// WE IDENTIFIED ONE OF THOSE ELEMENTS – THE LONG-TERM LEASE THAT UNDERLIES THE IPP – AND THESE LAND LEASES RUN FOR 20 YEARS AND THEY ARE JUST AS CREDIT WORTHY AS THE POWER PURCHASE AGREEMENT // its client, the Umhlabal Land Lease Company, as many as possible on a discounted cash flow basis, creating an exciting portfolio, for which investors have shown tremendous appetite.

“Our clients and partners have projects that have been commissioned in the energy space and are looking for return enhancement in those projects,” says Oldacre. “There are elements in the renewable value chain that offer higher returns than owning the energy plant, for a lower risk profile. We

identified one of those elements – the long-term lease that underlies the IPP – and these land leases run for 20 years and they are just as credit worthy as the power purchase agreement.”

The next battle was helping investors to understand the value of the land leases – not an easy task.

The Graysmaker team went out to the market and talked the idea through with many potential moneymen with little success. But then they met with the leadership team from Hulisani, a

JSE-listed investment company focussed on energy – the perfect fit.

“We managed to raise R450 million from public investors and we are around half of that already in in terms of disbursements, which is very productive in terms of having to compete against other investment opportunities our clients would have knocking on their doors all day,” says Oldacre.

“Our business is to find the individual opportunities that we understand thanks to our exposure in

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INDUSTRY FOCUS: INVESTMENT

those market segments. We then put in our own equity and attract a larger, better-funded partner who is ‘short’ the knowledge and specific information and with whom we can build that long-term relationship with by understanding their own strategies and supporting those.

It really needs to be an open win-win approach to Africa.”

In South Africa, Graysmaker has identified around 175 landowners, usually farmers, who have suitable assets. The company is now well underway with its approach to all of these potential partners and the winwin attitude and behaviour is clearly working. Land owners get financed for their lease up-front and Graysmaker and its client get the right to the lease, energy companies get fantastic sites and a highly bankable land owner, who is focussed on adding value and further developing the investment potential, and South Africa gets improved energy infrastructure potential. Graysmaker is also always keen to promote existing activities on land; so, for example, if a

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land lease becomes available on a site where there is potential for vineyard operation to bolster the investment prospect, Graysmaker will pursue that activity, both as an investment and also in response to the call by the SA Government to empower and develop the next generation of our people.

“We raise funds, we disperse those funds into our own investments with the idea that because we are not the largest investor, all we can ever do is take a small equity position in a project but, because we have spent the last decade figuring out what the characteristics are that modern investors look for in making infrastructure investments, we make for a very strong execution agent. We drive our own projects to a point where they attract investors from the wealthier parts of the world naturally, and our projects have been selected for their fundamentals of the risk return relationships.

“We originate our own investments throughout the continent and develop them to a point that our peer group outside the country respond or not

they have an appetite for that kind of investment. What we generally find is, because we are project development and investment specialists, when we push an idea people quickly realise that our approach and pre-development work is of as high a standard as anywhere in the Western World and that what we bring them is more than just an idea, it’s a well-considered and bankable opportunity,” says Oldacre.

After success in its local market over the past two years, the Graysmaker team is already making moves on the continent and into Europe. To date, Graysmaker has invested in wind energy projects, solar PV projects, water generation and sanitisation projects, agricultural holdings, residential property, and a coal technology supply company.

“There are opportunities that can be exploited using our wellestablished models in Africa as well as in traditionally much more mature markets such as then UK and Europe,” says Oldacre. “We accept that we are always going to be opportunity rich,

GRAYSMAKER ADVISORY

// OUR SPECIFIC FOCUS IS INFRASTRUCTURE. FIVE YEARS AGO, THAT MEANT ONLY ENERGY AND NOW IT MEANS ENERGY AND WATER // capital poor and will always have to prioritise and behave like we are playing the game of ‘The Red Queen’ by running in order just to stand still. As long as we continue to attract capital and can deploy it, we are being of benefit to Africa. While every day is exciting, it is not always easy,” admits Oldacre.

CONTINENTAL INVESTOR Africa will be home to 50% of the world’s population growth until 2050, and will see 12 megacities developed.

The continent is home to the fastest growing middle class and more people are migrating to urban centres which is pushing demand for energy infrastructure.

“We have an understanding of each country’s attributes, we understand the external environment, and we understand firm-specific attributes of the utilities and the potential

participants in the low carbon energy sector,” says Oldacre.

“Today we are in a situation where Graysmaker tries to bring an understanding of the difference between what needs to go on in Africa, what goes on in the rest of the world, and where the business opportunities are in that juncture.”

One business opportunity that has been identified as complementary to Graysmaker’s existing portfolio is water.

Already recognised as a precious and scarce resource, water is highlighted

by Oldacre as a promising investment area, which is also technology rich. The company is particularly interested in the creation and supply of demineralised water for industrial use. For this reason, Graysmaker recently entered into a partnership with Prosep Chemicals (Pty) Ltd, a 35-year-old water company in South Africa focussed on sanitation,

water purification and commercial and industrial water applications, where an agreement has been reached to fund R50 million in working capital to build the joint venture’s market offering.

“It’s commonly accepted that by 2030, South Africa as a standalone example, will be 22-25% short of its water requirements. That is just 12 years away. We started in the energy sector in SA in 2006, that’s also 12 years in the past and the time went so quickly that we sometimes look back in awe and shock at how much has been done.

Looking forward with the same mindset that we must be of benefit to South Africa, and that the next 12 years will pass in a flash, we have invested into a specific technology and a specific water company that has its focus on sanitation and water generation. We have brought to them the idea of atmospheric water generation for commercial and

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INDUSTRY FOCUS: INVESTMENT

industrial applications and are funding a pilot application for the technology. It’s not for drinking water as municipalities will always work to ensure their constituents have drinking water.

“The continent has a lot of development around the coastal areas and there are big opportunities in these coastal areas for harvesting humidity and that technology already exists. A plant owner can collect and store that water in a form that is potable or de-mineralised which many companies prefer.

Depending on your appetite for risk, this technology already exists from Israel, India, Germany, USA or elsewhere.”

Demand for de-mineralised water comes from the mining, science, engineering, automotive, pharmaceutical, and many more industry sectors. It is not recommended for drinking, but current practice is to use municipality sourced water and demineralising that – which has cost implications and also is a use of water that can be better used for drinking.

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While water and renewable energy are key technological components of the Graysmaker business, Oldacre is keen to point out that low carbon energy generation is where he sees the future of strategic infrastructure investment for the continent.

“We don’t think that renewables as a sector will ever be more than one of the technologies contributing to distributing generation on the continent,” he says. “We believe the market is about low carbon energy generation, which includes gas, possibly as LNG. From a technology point of view, we’ve started to notice that there are some major global organisations developing footprints in Africa, that are low carbon in form. It’s about technologies that are not considered to be renewables but offer the potential for the energy sector to be much larger and much more relevant to the countries in Africa. What we see, strategically, is that there is a low carbon energy opportunity rather than a renewable

opportunity on the continent.”

For this reason, Graysmaker will be increasing its interest in those countries where significant natural gas reserves have been discovered, in addition to its analytical work developing renewables.

As an example, Mozambique is working hard to improve its standing with international investors and Graysmaker has experts on the ground who can advise on the legislative environment, guiding partners towards success.

Generally, for some African investment houses, 2016 and 2017 were not easy years, and investment opportunities were volatile in many cases and outright dangerous in others. As a result, many institutional investors turned to the staple property type investments as safe havens. The South African economy was unstable throughout that period and certainty from government was unachievable.

Following the appointment of the new President in January, opportunity pricing has stabilised and business

GRAYSMAKER ADVISORY

confidence is on the up, with the focus on developmental frameworks signalling Government’s intentions.

“Things have been good recently,” says Oldacre. “We haven’t complained about what we’ve had to do for a number of years. This is because we have rubber on the road and some of our projects are generating revenue for us. If we were in an environment where we were green fielding with no support and no portfolio, things would be tough.”

The very purpose of this exciting young company is to make investing clearer. The very name of the company elects a constant reminder of the complicated grey in investing is what needs to be unpacked. That grey will never go away and the ability to bring out the nuances of opportunity and risk is what will differentiate the winners in the future.

“Our competitive advantage is not that we have more money than anyone else, because we don’t. It is not the fact that we have better engineers or investment managers either, because we don’t,” states Oldacre. “What we have is understanding of firstly that we work internally in a system that requires a theory of systems to identify the interplays between levers. We also strive to understand the strategy of the organisations that we deal with from a partner point of view better than anyone else who is working just to attract money. We are not selling a product; we are selling our ability to manage complex systems of knowledge, focussed around technology and commercially finance. We are saying to our partners and potential partners, we understand what your drivers are, let us show you how our investment and business model can bring value to your own desired outcomes in Africa.”

In the future, Graysmaker will expand its reach further, to include agriculture. Graysmaker currently manages six individual agricultural land parcels in South Africa and believes that its understanding of water and energy give it a cost advantage in production

Hulisani nurtures investments in energy and our hands-on approach ensures sustainability, consistency and growth.

over its traditional competitors. This portfolio is growing as new and specific opportunities are introduced.

“Now, our specific focus is infrastructure. Five years ago, that meant only energy and now it means energy and water. In five years’ time, that may well mean energy, water and agriculture. Already this alignment is referred to by academics as THE NEXUS.” Long-term, the company is targeting the build of a major asset base with constant reliable dividends - following the spirit of adventure on which the company was founded.

“We would like to build ourselves a wealth creation opportunity and we’d like to do that by having enough diversified, high moral standing of interesting asset under management so that we can maintain our constant investigations and interplay into the growing value chains that energy, water

and agriculture represent for us. Once the portfolio is of a size, we will in effect become farmers in suits with ties of that value chain, forever discovering and improving upon new opportunities out of that same value chain – just like the land lease business came out of the renewable energy ownership business. We are looking for a breadth of investment size that rivals the property funds, who we think are overplayed, over-invested and not overly exciting to institutional investors. We intend doing this openly, transparently, with a strong sense of social justice and with absolute integrity – that is how we want to be remembered,” Oldacre concludes.

WWW.GRAYSMAKER.CO.ZA

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AFGRI AGRI SERVICES

AFGRI Embracing

Digital Farming Revolution PRODUCTION: Manelesi Dumasi

For 95 years, AFGRI has been leading the way in South Africa’s agricultural industry and now it is looking to the future and a digital revolution. The company has developed an eAccounts system and has invested into a financial institution so that its clients can make use of a full service package when managing their business.

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INDUSTRY FOCUS: AGRICULTURE

//

South Africa’s agricultural sector has long been viewed as a key contributor to the economic prosperity of the nation, and the region. Famous for maize, wheat, sugar cane, various fruits, flowers and wines, South Africa is a major player on the global agri scene. The country’s agri sector employs more than 800,000 people and is responsible for driving food security and employment.

But the agriculture sector is changing. Traditional farming methods are less common. Technology, like in any industry sector, is becoming more and more prevalent. Job creation in agriculture is slowing and big businesses are looking to diversify offerings to avoid slowdowns that arise as a result of unpredictable situations such as drought, political instability, global economic crisis, or climate change.

South Africa’s National Development Plan (NDP) set out ambitions to create almost one million jobs in agriculture by 2030, and while this is entirely possible, the SA government must ensure it has the backing of big businesses.

AFGRI is an example of a South African agricultural business that is advancing employment creation across the entire value chain. Investing in growth across the continent, AFGRI is not only creating opportunities for farmers, it is crafting an entire agriculture ecosystem so that customers can focus on their core business.

Whether it’s finance, infrastructure, equipment, or anything in between, AFGRI can deliver.

Established in 1923 as a cooperative style farming operation, AFGRI has expanded and diversified to become

a trusted, multi-faceted partner of the agricultural industry.

Embracing the digital age, and looking forward to the fourth industrial revolution, AFGRI has advanced its online capabilities significantly and now offers a major digital platform that can help farmers make and receive payments, manage stocks, and keep fingers on the pulse of business from

// WE HAVE BEEN RUNNING WITH THE PROJECT FOR THE PAST 18 MONTHS AND WE HAVE HAD R9 BILLION THROUGH THE SYSTEM //

Applying extensive software development expertise to deliver high impact services  +27 87 654 3300  +27 86 500 2626 30 / www.enterprise-africa.net

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AFGRI AGRI SERVICES

// EVERYTHING IS LINKED AND ALL OF THE SYSTEMS TALK TO EACH OTHER. IT PUTS US AHEAD OF OUR COMPETITORS AS NO ONE HAS ANYTHING AS SOPHISTICATED AS THIS // anywhere in the country.

“We have developed an electronic transaction system, eAccounts, and it works similarly to any other banking platform,” explains AFGRI Agri Services CEO, Tinus Prinsloo. “We don’t have a banking license so we do not call it a banking platform, but it allows people to log into the system, discover the best price, sell maize or pay a deposit on a tractor, and pay the balance to the farmer. Everything is linked and all of the systems talk to each other. It puts us ahead of our competitors as no one has

anything as sophisticated as this.”

AFGRI calls its eAccounts system ‘the future of farming in the palm of your hand’. Delivered through AFGRI’s financial services division, UNIGRO, the eAccounts system has been called a ‘ground breaking electronic account management solution’ by users that have so far processed more than R9 billion through the platform.

The company developed the system in response to demands from the industry for up to date information, and the ability to make effortless

transactions. But, those demands quickly changed and advanced, and the next step was farmers looking for a full scale financial solution to streamline their financial operations.

Created by a local fintech software company, AFGRI’s eAccounts system is the first online transaction system to be delivered in South Africa by any business that isn’t a mainstream bank.

“We started the E platform to enable the farmer to do transactions from home – he can pay suppliers or do anything that internet banking can offer apart from drawing cash,” says Prinsloo.

AFGRI Agri Services CFO, Jacob de Villiers explains that eAccounts will probably need another 12 months of development before it is a complete project. “We have been running with the project for the past 18 months and we have had R9 billion through the system.

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INDUSTRY FOCUS: AGRICULTURE

Development continues and we will be busy for another year, fine tuning what we offer on the platform.

“When we started the project eAccounts we budgeted for development costs of R10 million. It was designed for the finance division to do online payments and create accounts. Since then, we have involved all other divisions and the project is much bigger.” eAccounts is accessible through any device at any time of day. The system allows users to manage stock, view grain prices, make transfers, schedule payments, access accounts, monitor rainfall, and much more. But it still left AFGRI feeling that more could be done for its clients. And so, in March 2017, AFGRI completed its purchase of the

// WE ALWAYS SAY THAT WE ARE NOT HERE JUST FOR PROFITS. WE UNDERSTAND THAT YOU NEED TO DO WELL TO DO GOOD, SO FROM THAT POINT OF VIEW WE KNOW IT IS IMPORTANT TO BE EXCELLENT IN WHATEVER WE DO // South African Bank of Athens.

“Success with eAccounts brought us to the next step where we realised if we want to offer the full package for the client, we have to look at obtaining a banking license so that we can offer credit cards or even for taking deposits as some clients sit with surplus cash.

This is why we looked at buying a bank, and that is latest initiative that AFGRI has undertaken. We want to be

Tinus Prinsloo - AFGRI CEO

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involved in banking so that we can offer the client a full-service spectrum.

That process has been approved by the Minister of Finance and the Reserve Bank. The only outstanding issue is one of the other shareholders must gain competition commission approval for their involvement,” says Prinsloo.

A complete service package makes AFGRI attractive as it will become the first and only ‘one stop shop’ in South African agriculture.

“Not only will we offer all of the traditional UNIGRO products, we will also now do anything financial,” says Prinsloo. “We will take deposits, do transactional banking, offer credit cards; and that opens new doors for us. The Bank of Athens has seven branches.

That is obviously not enough, and they are obviously not in the right places. We sit with 69 shops scattered all over the country and that will help us offer some sort of ATM service but with time we will expand the bank’s branch network to areas where we service our clients.”

But agriculture remains at the heart of AFGRI and brining financial products into the service portfolio represents an added benefit for clients rather than a full diversification strategy.

“For now, we are purely focussed on the agriculture sector and servicing our existing clients,” reminds Prinsloo.

AFGRI Group CEO, Chris Venter says that the deal to acquire the bank is now in the final stages.

“We want to remain agile so that we can attach to opportunities that come our way. One of those opportunities was investment into the South African Bank of Athens which is something we can use to expand our financial services sector with banking opportunities

AFGRI AGRI SERVICES

and products. The process is almost complete and we can then expand the group further, incorporating banking products for our customers.”

He reminds of the group’s vision and suggests that these new digital services will assist in this regard.

“Our group strategy is to drive food security across Africa and we want to do that by making sure that we have excellent management teams. We always say that we are not here just for profits. We understand that you need to do well to do good, so from that point of view we know it is important to be excellent in whatever we do.”

In the space of just a few years, AFGRI has moved from continental agricultural powerhouse, to African agricultural industry leader, with a digital financial presence to rival anyone. Driven from the top, AFGRI’s

strategy is ambitious, and Venter is keen for the group’s thousands of employees to realise things are achievable.

“A lot of the things we have done, two-years ago I would have said a lot of it was impossible. But I have the saying from Nelson Mandela in my office – ‘things seem impossible until they are done’. It is important for me to drive that and I do believe that people need to stretch themselves. I stretch myself, and when we look at the way forward we shouldn’t be looking at what we think we can do, we should be thinking outside the box,” he says.

“Looking back at 2017, I do believe we have been successful,” he adds.

Stats SA says that agriculture will undoubtedly be one of the key drivers of job creation in the coming years and combined with digital, there’s no

telling what direction this exciting industry could take next.

Earlier this year, several new apps were released for the use of farmers in Kenya; a Canadian company is utilising aerial imagery apps to assist in crop monitoring; and Nigerian companies are developing apps that can link technology across a farmer’s operation.

There is no doubt that those that do not embrace the digital age will fall to the wayside. Fortunately for South Africa, AFGRI is at the forefront of this revolution and looks likely to achieve its vision now and in the future.

WWW.AFGRI.COM

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THE BIOVAC INSTITUTE

Biovac to Produce

GBS Vaccine

in Cape Town PRODUCTION: David Napier

South Africa’s Biovac Institute is developing a novel vaccine against Group B Streptococcus disease. Supported by PATH, developing the vaccine in South Africa is proof for CEO, Dr Morena Makhoana, that this local industry leading organisation is working to international standards.

//

The Biovac Institute is a world-class, specialist vaccine manufacturing business based in Cape Town. The company was set up to produce important vaccines for South Africa, and for export markets.

Like another of Cape Town’s key industries, wine, human vaccines need patience to make as they take a long time to research, trial, produce and distribute under cold chain conditions.

Just as you would with vines, you must first establish the optimum conditions and facilities for producing a quality product and have in depth knowledge

about the market to which you will supply.

Since its official formation as the organisation we see today, Biovac has developed the knowledge and skills to play in the complex, challenging and strictly regulated healthcare environment. CEO, Morena Makhoana – a medical doctor by training – says that the future of the business is bright, and export opportunities and new partnerships are giving this internationally respected organisation much to be excited about.

“I am certainly optimistic about

times to come,” he tells Enterprise Africa. “Because vaccines are part of a country’s primary healthcare system, regardless of the cycles in the economy, there is always a need to vaccinate children against diseases.”

Recent successes have seen Biovac add new products to its portfolio and, through international cooperation, realise the ambition of manufacturing new vaccines locally.

“We now have strategic partnership agreements with three leading global organisations that we are very proud of,” says Makhoana.

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INDUSTRY FOCUS: MEDICAL

GBS The most recent project that Biovac has been involved with is an internationally significant vaccine development programme, in partnership with Seattle based PATH, which will see the company become one of the world’s first organisations to develop a product that can vaccinate against Group B Streptococcus (GBS).

A leading cause of infection in new-born babies, GBS currently has no licensed vaccine and in parts of the developing world, mortalities have been prominent.

“It’s a very exciting vaccine and it’s not ‘just another product’ that we are developing,” says Makhoana.

“While two other multinational companies are also in the process of developing this vaccine, Biovac is currently the only company, that will be developing and manufacturing the vaccine in the developing world That is a unique opportunity to showcase our capability, it will answer the call to vaccinate against a disease that is specific to Africa and prevalent in other parts of the world, and it will build our intellectual property and capability to potentially supply globally.”

If Biovac’s plans are realised, this could be the start of an exciting journey for the company, further embedding its reputation as a globally recognised establishment. “This we hope will be a global product that can allow us to enter the global vaccine supply eco-system,” details Makhoana.

“Our ambition is for us to be a global supplier in time, much like our counterparts in India.”

It is previous successes and a proven track record that has led Biovac to this point. Several successful milestone moments in the company’s history have confirmed it is able to deliver to partner internationally.

“The past six years have been where the momentum has come through,” admits Makhoana.

He explains that the company reviewed its strategy and moved to

36 / www.enterprise-africa.net

an approach of backward integration of its product offering where Biovac initially focussed mainly on importing, packing and labelling vaccines, while building their vaccine manufacturing facilities. In 2012, Biovac signed its first major transaction with a global pharmaceutical company - the French giant, Sanofi.

“The second big milestone came in 2015 when we signed a deal with America’s Pfizer for one of their flagship products,” explains Makhoana. “With Sanofi, we will be filling the already blended products in a sterile process.

The Pfizer arrangement will see us blending the product locally and while it sounds simple, it is actually a very complicated technical arrangement that increased our capabilities to deal with biological products. Our recent agreement with PATH with the support

of is a product development project and it completes the value chain. We remain an importer, but we are now getting involved with manufacturing, and we also contributing to R&D in an environment where we don’t have a large skills base and where we don’t have many vaccine manufacturers.”

Of course, our investment in job creation and the development of internationally acclaimed sterile manufacturing skills is part of our contribution to our economy.

Other than these important projects underway, Biovac is looking for more opportunities where its expertise could be deployed. “We are here to stay, and we certainly have more projects to come,” says Makhoana.

He uses Ebola and flu as key examples of how the African continent battles to respond to severe pandemics,

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THE BIOVAC INSTITUTE

// THERE ISN’T A QUESTION ABOUT IF A PANDEMIC WILL STRIKE, THE QUESTION IS WHEN – FLU STRAINS CHANGE // and while Biovac will not look to develop an Ebola vaccine, flu could certainly represent an opportunity for local manufacture.

“Influenza is something which has been present for many decades, there isn’t a question about if a pandemic will strike, the question is when – because flu strains change and evolve,” he says.

“There was the 1918 pandemic, the 1968 pandemic, the 1978 pandemic,

and the 2009 near-pandemic. With all of these pandemics, governments tend to become nationalistic and tend to drive their resources inwardly, therefore looking after their own first. There are many flu vaccine manufacturers globally for seasonal use but when a pandemic strikes these companies would struggle to serve all the global demands and their priority will typically be to serve their immediate geography first, leaving those that do not have vaccine manufacturing capability at the back of the vaccine procurement queue.

The 2009 flu pandemic threat was a stark reality check for the WHO and the South African government to such procurement risk. This is why Biovac is looking to collaborate with a likeminded company keen to share their vaccine manufacturing technology so that we could produce their flu vaccine

here in South Africa on a routine basis.

Doing it routinely is very important as when it becomes routine, it’s much easier to upscale when the need arises.

It’s not just about commercial success but also about responding to South Africa’s needs.”

He cites Australia’s CSL (now Seqirus) as the perfect example of a business that has excelled with flu vaccine production, ramping up operations to export globally.

SOUTH AFRICAN STORY 2003 was the year which saw Biovac being launched as a public-private partnership, but its story goes back further than that. The company has always been involved in the health industry, but it has been set up in different formats before realising the success it now enjoys.

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INDUSTRY FOCUS: MEDICAL

// WE HAVE 300 PEOPLE AND 65% HAVE UNDERGRADUATE DEGREES – THAT TELLS YOU ABOUT THE CALIBRE OF PEOPLE WE HAVE, BUT IT ALSO TELLS YOU HOW EXPENSIVE THEY ARE // “In the mid-60s, most governments in the developed or developing world had vaccine manufacturing assets which were state owned. South Africa was one of those which had its own vaccine manufacturing capabilities,” recalls Makhoana. “The country was in isolation because of apartheid so there was a need for self-sufficiency.

Fast-forward and South Africa became more isolated; the economy in the 80s was not doing well and the then government was not investing in vaccine manufacturing assets. On the other hand, globally, technology was advancing and new and more advanced products were coming into the market.”

The country was importing more and more vaccines than before, and manufacturing was largely neglected.

But, like all industries, 1994 gave local vaccine production a shot in the arm.

“1994 and the new dawn came, a new government took over and between 94 and 99, they reviewed all state assets and the vaccine asset came to the fore. At that time, the state vaccine asset was not producing much. Two facilities had been shut down already and there was only one facility remaining in Cape Town. The government consulted globally and came to the decision that a publicprivate partnership was needed where the State does not run the asset but has equity because of its strategic nature.

“There was a competitive bid and that culminated in the Biovac that we know today where private and public shareholders are both well represented and operate is a symbiotic arrangement,” says Makhoana.

Initially, Biovac was led by Selwyn Kahanovitz, a pharmacist with a business importing vaccines. When

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the opportunity came to bid, he put together a consortium that was successful and he became the first CEO of Biovac from 2003 to 2010. Makhoana joined in 2004 as Medical Affairs Manager, becoming deputy CEO in 2008 and taking over as CEO in 2010.

“Prior to joining Biovac, I was in clinical medicine in the public health sector where I was a practicing doctor.

Coming into Biovac was my first entry into the commercial world. I wanted to get into industry using my medical knowledge but I did not have the vision of becoming CEO,” admits Makhoana.

AFRICAN SOLUTIONS PROVIDER Biovac wants to become ‘a key pillar to Africa’s growth’. “The vision is about building capacity in a sustainable way,” says Makhoana. One of the company’s key objectives is to strengthen the pharmaceutical and healthcare environment in South Africa and Africa.

Makhoana is ambitious and enthusiastic about the prospects of growth on the continent and says that the growing wealth of the continent should help drive expansion of the industry.

“We are already active in the countries around South Africa including Namibia, Swaziland, Mozambique and Botswana,” he says.

“Further north is where the challenge comes in. The continent is becoming wealthier, but we have not seen countries start to purchase vaccines themselves– vaccines have typically been donated by UNICEF, GAVI, WHO and other international organisations.

// Intramech and Biovac The “FOCS R” chillers used for The Biovac Institute are configured in a typical primary/secondary loop chilled water system.

The plant consists of three 600kW super low noise air cooled heat recovery screw chillers to provide the required cooling and heating capacities . The chillers include special sound attenuation features to ensure that noise levels are kept to a minimum to accommodate the residential area located nearby as this is a 24 hour operation facility.

The plant deploys a minimum cooling base load to ensure that hot water production is always available. The purpose of this plant is to produce the required climate conditions within the vaccine rooms that are maintained through cooling and reheating of the air provided to the rooms. This is to ensure that the quality of the product is maintained and that the integrity of the institute is upheld. The Biovac Institute is a vaccine manufacturer based in South Africa with a vision to contribute to the health needs of Africa and developing countries

INDUSTRY FOCUS: MEDICAL

Mostly, the vaccines are donated to countries that are low income and this means the direct markets in those countries are very small.

“Governments are the largest buyers of vaccines, so we take various approaches. Where there is self-purchasing, we try and access those markets as much as we can – that’s middle-income countries surrounding South Africa. More than 65% of vaccines come to the continent through the donor mechanism. The other method is to develop our own vaccines that can be supplied directly to the WHO so that we don’t have to be reliant on a single partner. We would also target the smaller private markets in countries like Nigeria.”

Exporting will help to ensure Biovac’s capacity is effectively and efficiently utilised. “Vaccines is a volume game. We cannot rely on South Africa alone,” says Makhoana.

Fortunately, Africa is home to some of the world’s fastest growing economies and countries such as

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Ethiopia, Kenya, Uganda and Tanzania are expected to achieve significant GDP growth figures of between 5.2% and 8.5% through 2018. Ongoing reforms and the improvement in commodity prices has driven up export revenues across the region and this is good news for South Africa’s exporters who are looking to Africa as an opportunity.

At home in South Africa, the economic picture remains unclear.

While confidence and sentiment have improved since political stabilisation in January, meaningful and sustainable growth figures are yet to be realised, but Makhoana remains confident.

“If the economy continues at its current rate for the next five years, or if it deteriorates further, new vaccines are unlikely to be introduced and that could make our business stagnant from a growth perspective. In the short term, we have not felt an impact, but we are monitoring to ensure we are prepared for the future,” he says.

“I’m an eternal optimist,” he adds. “Personally, I feel the current

administration is stabilising the country.

Like with any injured patient, the first thing you do is to stop the bleed and I think that is what is happening right now. After next year’s election, should they continue on this trajectory, that’s where they can start building the economy and in the next five years we should see real growth.”

BUILDING AN INDUSTRY Vaccine manufacturing forms part of the wider pharmaceutical industry, which forms part of the wider healthcare industry. Vaccine manufacture is more of a biological speciality than a chemical concern (traditional pharmaceuticals) and, as such, it comes with more complex issues making it a more difficult market to enter. This is why Biovac must invest heavily in its people to ensure it has the top talent available and ensuring that the industry is prepared for the future.

“We are forging links with the local universities where we can outsource work or access their skills much like the

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www.seidenader.com

INDUSTRY FOCUS: MEDICAL

// A FEW YEARS AGO, PEOPLE ASKED ME ABOUT MY BIGGEST HEADACHE AND I ALWAYS SAID IT WAS FUNDING. NOW, SKILLS IS MY NUMBER ONE PROBLEM // sort of eco-system you have in other parts of the world,” says Makhoana. “A few years ago, people asked me about my biggest headache and I always said it was funding. Whilst funding remains a concern, retention of our employees and their skills is my number one

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problem. We often thought that we were unique in that respect however it appears that it is a global phenomenon in our industry.

“We are building a bio-sector from scratch and that feeds into the bioeconomic strategy of the country and

the region.

“In South Africa, we are not short of high-calibre academic skills – we have many PhD and Masters educated people. The conversion of those skills into day-to-day manufacturing is where we find the challenge. Fortunately, our staff turnover remains relatively low and our ongoing investment in growing our people’s capabilities and enabling their career growth within our growing business is paying off.

We have 300 people and 65% have undergraduate degrees indicating that our staff calibre is high. Our skillset is world renowned, scarce locally and therefore expensive.

“Investing in continuous learning and development is costly. Biovac often look to other parts of the world to bring expertise to our people due to a lot of the applicable training courses and networking conferences being conducted overseas. Our ongoing skills development investment is

THE BIOVAC INSTITUTE

much larger than that of a typical pharmaceutical company. We pride ourselves in investing in our people ultimately also to ensure we offer effective products and services to our customers, whether directly through the healthcare service providers or whether indirectly to the end user, the consumer. We typically get the raw skills from the universities or other pharmaceutical companies, but we have to convert those skills into biological vaccine skills. This is done in places like Europe with established international companies like our partners. In return those acquiring the skills first hand then share their new skills with the rest of the team back home,” the CEO says.

Asked if Biovac is the local industry leader, Makhoana is in no doubt.

“From a local vaccine manufacturing perspective, right now Biovac is the only local manufacturer,” he says, “but that does not stop anyone coming in it’s not easy, but it could happen.”

The company’s competition for market share comes from international players looking to get involved or strengthen their position in Africa.

Big global names sell into Africa and deliver products that are well-known and extensively used in other markets.

“Our strategy is to manufacture locally, provided that the current preference is to buy locally manufacture products.

It doesn’t happen at all costs but it has to be balanced between locally manufactured and imported products.

We are in a favourable position as we are the only local manufacturer but if an important product comes in at such a discounted rate and we cannot match that, we understand normal market dynamics and we could possibly lose out.”

The company is gearing up to face

increased competition by building its export capabilities and building relationships in new markets so that exporting can become a bigger part of Biovac’s success. “Exports have to be the main market in time,” insists Makhoana. “South Africa will always be our primary market but we have to look at exporting to make sure we are sustainable. Other local pharmaceutical companies have done that successfully, look at Aspen Pharmacare.”

Just like South Africa’s top vineyards putting the country’s wine industry on the map, Biovac hopes to be the business that showcases South African vaccine manufacturing to the world.

“Like any CEO building a company

// LIKE WITH ANY INJURED PATIENT, THE FIRST THING YOU DO IS STOP THE BLEED AND I THINK THAT IS WHAT IS HAPPENING RIGHT NOW //

they passionately believe in, Biovac is close to my heart,” says Makhoana.

“International competition, skills acquisition and retention and funding remain positive challenges, but as long as we follow our strategy and the longer we continue achieving our small and big goals, we will gain the attention of and remain top of mind for our current and future international partners. This ultimately validates that we at Biovac are doing world-class things in the right way, with quality standards intact.

“My vision for Biovac in 2030 is to be in many geographies offering vaccines and other biological products to the world. I am confident that we will get there and I am proud,” he concludes. .

WWW.BIOVAC.CO.ZA

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TOURVEST DESTINATION MANAGEMENT

Proudly South African Tourvest Enjoys

Global Success PRODUCTION: Karl Pietersen

Industry leading integrated tourism group, Tourvest, is furthering its reach around the globe by opening up in East Africa and entering new markets including Australia and New Zealand. CEO of Tourvest’s Destination Management division, Martin Wiest talks to Enterprise Africa about the company’s future plans. www.enterprise-africa.net / 45

INDUSTRY FOCUS: TOURISM

//

As the largest tourism business in the Southern Hemisphere, Tourvest is riding the wave at the top of a travel and tourism industry that is showing no signs of crashing anytime soon.

The company, which has roots firmly planted in South African soil, is now home to more than 5000 people and incorporates several major brands across a range of sectors.

Tourvest is ambitious, and the company is hoping to grow into an international travel and tourism powerhouse over the coming years.

Martin Wiest is CEO of the group’s Destination Management division and he tells Enterprise Africa that the future is very exciting for this historic African powerhouse.

“The only limitation that we have is the availability of cash for acquisition or organic growth. We are in the fortunate position of being substantially cash generative. There’s always more ideas than there is available cash so it’s our job to identify the cleverest places to invest our cash.”

Tourvest was founded in 1997 as an entrepreneurial experiment to create a tourism-specific business that incorporated various African focussed activities. After growing quickly in its first years, the business accelerated its growth by going on an acquisition extravaganza.

“In South Africa, in the late 90s, there was a listing boom,” recalls Wiest. “Various stakeholders, mainly from the jewellery and inbound leisure sectors, agreed that it was a great way of creating cash to grow a tourism business rapidly.

“The key person at the time was Steve Griessel who was group CEO and he took a few jewellery businesses

and some inbound tourism businesses and brought them together as one.

“It was listed in 1997 before going on a wild shopping spree, purchasing 200 businesses over a two-year period. Through that, we streamlined, installed business pillars and applied logic to the situation, resulting in the Tourvest you see today – the biggest tourism player in the Southern Hemisphere.”

The companies purchased by Tourvest range in size and style. Wiest had been part of a business formed in 1981 before moving into Tourvest upon acquisition. The oldest business in the portfolio is Wilson Collins Travel, founded in 1901.

Right now, attractive investment opportunities are being presented in East Africa and Wiest sees this as an ideal region for Tourvest to attack.

AFRICAN EXPANSION “The core driver behind that is mainstream destinations like South Africa have new competition in the digital environment such as booking. com or Expedia,” he says. “While they don’t kill us, they certainly apply a lot of pressure in our mainstream destinations. In niche destinations,

// WE BELIEVE THAT THE CULTURE OF AN AFRICAN COMPANY IS HIGHLY ENTREPRENEURIAL AND OPPORTUNISTIC BUT NOT AS BUREAUCRATIC AS MANY EUROPEAN COMPANIES // 46 / www.enterprise-africa.net

that the consumer considers exotic, no one wants to work there without a partner.”

Currently, the company operates a highly successful operation in Kenya, Tanzania and Uganda, and Wiest explains that this will be used as a breeding ground for growth further north.

“We are taking our east African operation as the incubator for expanding north into Ethiopia and south into Rwanda - the infrastructure is there, the vehicles are there, the corporate structures are there, and the registered companies are there. The same applies to Mozambique.”

He also highlights Madagascar as an opportunity because of its beach tourism offering and potential extensions to holidays into Namibia and South Africa.

“The principle is not because Ethiopia or Madagascar are heaving, the principle is that those countries, because of their exotic nature, will be a home for DMC (destination management company) for decades to come and mainstream destinations do not have the same level of sustainability.”

But it’s not only Africa where the CEO sees potential. Although tourism across the continent has been highlighted as an industry with major possibilities, Tourvest is an international business and continues to look further afield for growth opportunities.

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INDUSTRY FOCUS: TOURISM

“We are focussing very strongly on expanding, not only on the African continent, but elsewhere too. We want to get into countries where the business model offers a high-service, high-hand holding destination management concept, where we can remain relevant for decades to come,” says Wiest.

GLOBAL PLAYERS Four international markets in particular have been identified by Tourvest as locations which could offer up expansion opportunities for the company. “We are busy with expansion strategies in New Zealand and Australia. The logic behind that is the consumer profile travelling to those destinations is identical to those travelling to South Africa. The same applies to Argentina and Brazil.

Those four countries are where we

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want to acquire businesses in the next 24 months, and then synergise our customer base while moving into those environments,” says Wiest.

Tourvest’s existing international partnerships a rife for expansion of this nature.

“In South Africa we deal with hundreds of worldwide customers in terms of our overseas wholesalers.

We have around 150,000 trips to South Africa from wholesalers and at least half of those wholesalers also have products for New Zealand and Australia, so it’s only logical to try and gain a platform there.”

As well as growing in new regions, Tourvest will look to bolster its operations in existing foreign markets.

This means acquisition to build revenue so that the balance is more international and less African.

“We want to remain Africa’s

largest tourism entity and grow our base in Africa, but we feel very strongly that we want to have a more diversified business with more investments globally. We run a chain of destination merchandise stores in the Caribbean, we are investing in Cuba, we are running a retail environment in Spain, we are running a retail environment in India, but Tourvest still generates more than 70% of revenue on the African continent. We will always be an African company at heart, we believe that the culture of an African company is highly entrepreneurial and opportunistic but not as bureaucratic as many European companies. We would like 50% of our turnover generated outside of the continent, mainly because we are running out of growth opportunities in Africa,” says Wiest.

TOURVEST DESTINATION MANAGEMENT

// WE ARE BY FAR THE BIGGEST HANDLING DMC IN RUSSIA FOR THE WORLD CUP; WE WERE THE BIGGEST IN BRAZIL, WE WERE THE BIGGEST IN SOUTH AFRICA AND PART OF OUR TEAM WILL MOVE ONTO QATAR // Currently, the Tourvest group generates turnover of around $1 billion but, through international expansion, the hope is that this will be doubled over the coming five years. A key part of this growth ambition will be Team Destination Management (TDM), where the group is already strong.

TEAM DESTINATION MANAGEMENT “The business model is very unique,” details Wiest. Tourvest started its TDM to contribute to the German FIFA World Cup in 2006. “We started the business for TDM as a learning project for the 2010 World Cup in South Africa.”

He describes the business as a ‘globally mobile event specific DMC that moves from event to event’.

Currently, the team is as busy as ever, handling the FIFA World Cup in Russia and already preparing to move on for future major sporting events.

“Our team in Russia is over 600 staff and we are handling around 50,000 passengers, mainly for sponsors where our key accounts are Visa and Budweiser. We are also handling 15 of the 32 participating football federations with their friends and family programmes, and their own sponsor programmes and media groups. We are by far the biggest

handling DMC in Russia for the World Cup; we were the biggest in Brazil, we were the biggest in South Africa and part of our team will move onto Qatar, part of our team will move onto Tokyo for the summer Olympics and Rugby World Cup. What we’ve created is a business model of a globally mobile sports-focussed DMC and we are the only one in that environment.”

Asked if the group has become reliant on big sporting events, considering their inconsistent nature, Wiest says that a deliberate split between TDM and inbound leisure keeps the company moving.

“This year, the World Cup is our

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INDUSTRY FOCUS: TOURISM

// I BELIEVE VERY STRONGLY THAT TOURISM HAS A MATERIAL PART TO PLAY IN SOUTH AFRICA, RECTIFYING MANY OF THE SOCIOECONOMIC PROBLEMS WE HAVE HERE // single biggest and most profitable project by far. It’s in the region of $50 million which is around a third of our total turnover for the year. But in the next three years it is not. If you annualise it, it’s still important but not comparable to inbound leisure. The combination between big sporting events and inbound leisure is what makes us tick – both are equally important. This year, Russia will form around 50% of our EBITDA but in the

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next three years, that unit will lose money until we get into the Qatar World Cup. Sports is feast or famine and inbound leisure is bread and butter, but the combination is what keeps us healthy.”

TOURISM CREATES JOBS Investment in the tourism industry has been pushed heavily in South Africa recently, with Tourism Minister, Derek Hannekom and even President

Ramaphosa talking of the tangible benefits that a strong tourism industry can have for the wider economy. Wiest agrees and hopes investment will continue.

“On the continent, there is no better mainstream destination than South Africa,” he says. “The South African economy is heavily weighted towards agriculture and mining.

Agriculture will continue but mining is on the decline with the mines getting deeper and less cost efficient. We need new drivers of employment and the theory is for every eight tourists, there is one job created. It’s a job creator in a meaningful, decentralised fashion. It doesn’t only create employment in the urban centres, it creates jobs in the

TOURVEST DESTINATION MANAGEMENT

rural areas where the hotels, lodges and safaris are. Tourism has a material role to play but we don’t think we should look for mass tourism – volume tourism, but not mass tourism. We need to continue offering great value and service for little money.”

Currently, South Africa is placed highly in the world tourism competitiveness index, looking at what it offers for what it costs. It offers fantastic value for money, perhaps a function of the currency which has depreciated over the past few years. “I believe very strongly that tourism has a material part to play in South Africa, rectifying many of the socioeconomic problems we have here,” says Wiest.

Talking of the economic-political situation that has caused headaches for many business leaders in South Africa over the past few years, Wiest explains that the tourism industry saw the benefit of a weak Rand, encouraging large numbers of international tourists into South Africa.

“South Africans as a whole are far more upbeat about the future of their country than they were before.

Strangely enough, for us, 2016 and 2017 were two record years in a row and that was largely down to the previous administrations cunning ability to destroy the currency,” he says. “This made our business better than ever. Now that we have a more stable government, we see a slight weakening of our international markets in the face of a stronger Rand.

As a South African, I am very happy that the changes have occurred but for inbound leisure it is not necessarily the best thing. We must get used to a new reality – we are not going to have another record year, but we don’t want to have record years every year.

I would prefer a stable country, with a future for everybody, with slightly lower trading levels rather than a corrupt country with high trading levels but no future for my children.”

And the future does look bright for this very African but international

Martin Wiest, CEO

organisation. Acquisition activity will continue and movement into new markets will allow Tourvest to spread its expertise and success far and wide.

Wiest, who arrived in South Africa from his homeland Germany in 1983, says that he is confident about times to come because of the experience that has been built up.

“Anybody can trade while the market Is buoyant. I’m a strong believer that the management team

we have is better than anybody else, and that team has in the last 20 years grown the business consistently in good times and bad. We have a proven track record of being able to grow despite circumstances, and when everything aligns like it did last year, we can deliver humdinger years.”

WWW.TOURVEST.CO.ZA

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FIDELITY ADT

Fidelity ADT:

Always There For You PRODUCTION: Manelesi Dumasi

South Africa’s leading name in security is Fidelity ADT, and since the merger that brought Fidelity and ADT together in 2017, this industry leading organisation has gone from strength to strength, delivering for its clients without exception. National Sales and Marketing Executive, Rob Dale talks to Enterprise Africa about the company’s success.

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INDUSTRY FOCUS: SECURITY

//

To be part of South Africa’s private security industry puts you in amongst one of the busiest and most valuable industries in the country. With around half a million people actively involved in an industry that is valued at around R50 billion yearly, private security makes a real impact in the lives of people from all over South Africa.

Crime rates remain high in South Africa and this drives demand for private security. A study in 2015/16 revealed that trust in the country’s police force was just above 58% meaning that many entrust their property, possessions and lives to expert security providers.

One business that knows this better than most is Fidelity ADT. “We live in a country known for its vibrancy and dynamism, but sadly, not its safety,” the company states.

Fidelity ADT is South Africa’s largest security provider and, following a recent acquisition of ADT South Africa by the Fidelity Group, the company has set its sights on the top spot by investing into modern digital solutions that can assist clients in a way that is unrivalled by others in the sector.

The transaction that brought Fidelity and ADT South Africa together was finalised in March 2017 when the country’s competition commission approved a R2 billion bid from Fidelity which saw it take control of ADT South Africa’s residential and commercial services and operations and the ADT Kusela guarding business.

Today, The Group employs in

// THE COMPANY IS KEEPING UP WITH TECHNOLOGICAL TRENDS IN RESIDENTIAL AND COMMERCIAL MARKETS // 54 / www.enterprise-africa.net

excess of 56 000 employees, and manages a fleet of more than 4500 vehicles.

When the acquisition was completed, Fidelity Security Group’s CEO, Wahl Bartmann said: “We are exceptionally proud to announce the conclusion of this transaction and the formal establishment of Fidelity ADT. The merger brings together two strong teams with deep industry knowledge and experience, and positions Fidelity ADT as the leading provider of both residential and commercial integrated security solutions in Southern Africa.”

This year, Fidelity celebrated 61 years of successful operation and the acquisition of ADT South Africa came as the perfect birthday celebration. “If you add ADT’s armed response expertise and footprint in the residential market, as well as its security technology solutions, to Fidelity’s extensive capabilities in the guarding, cash solutions and integrated armed response sectors, you have a security firm perfectly aligned for future growth in the Southern African market,” said Bartmann.

Of course, the merging of the two business brings a unique set of operational challenges.

Bringing two working cultures together is no easy task. Employee expectations, rules and regulations,

// MANNED-GUARDING WILL REMAIN PART OF THE PRODUCT PORTFOLIO FOR THE FORESEEABLE FUTURE // structure, working practice, communication with customers – everything can change after a merger.

But Bartmann was not worried.

“We are confident that the merged team will soon feel part of a single Fidelity ADT family. We have a very experienced management team, who are well equipped to manage the integration quickly and efficiently,” he said.

INTEGRATING TECH One of the latest offerings from Fidelity ADT is its SecureHome and SecureConnect Apps which allow users to have full digital control over the security of their homes from the convenience of their mobile phone.

The idea is simple: replace expensive, old and complicated home automation systems with a convenient, simple and affordable application that can give peace of mind. The flexible apps designed by Fidelity ADT allow users to view the status of their home

FIDELITY ADT

security, quickly arm or disarm an alarm system, switch and dim the lights, detect movement, monitor CCTV, get video verification on their phone, and open and close electric doors and gates.

Using an app to take care of all of these activities reduces cost, provides quick and easy security solutions, and gets things done in an instant.

Understandably, Fidelity ADT is proud of its innovation.

“With the evolving security landscape and the drive towards always-on devices and the Internet of Things, Fidelity ADT is paving the way in merging security with innovativetechnology that goes beyond just home security,” says Rob Dale, Fidelity ADT Managing Executive.

“Today’s modern consumer not only wants more control of their home security, they want more control of

every aspect of their home. Identifying this gap in the South African market, we are proud to announce that we are launching this exciting new offering which takes home automation to the next level.”

The app is flexible and can be tailored to meet the needs of different individual clients – as your needs grow, your services can grow, but all in line with your budget. By 2020, it is expected that South Africa will have almost 24 million smartphone users and a move to adopt and app-based system seems obvious.

“The feedback from customers has been overwhelmingly positive,” says National Sales and Marketing Executive, Rob Dale. “The company’s services and technology create the illusion that someone is always at home. Customers are notified whenever there is a problem, and they

can use smart technology to see for themselves what the issue is.

“The company is keeping up with technological trends in residential and commercial markets,” Dale adds.

“The introduction of SecureHome, SecureConnect, and FindU are examples of digital advancements in the residential sector. Partnerships with Schneider Electric and SecuVue in the commercial sector shows the company’s ability to onboard other industry leaders.”

SecureHome and SecureConnect go beyond just security, they also bring lifestyle functionality to user’s fingertips. “They can include additional features like cooling or heating their home or opening and closing their blinds. This provides greater peace of mind and makes the system useful for every day convenience at an affordable price,” says Dale.

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INDUSTRY FOCUS: SECURITY

PEOPLE POWERED BUSINESS With all of this tech-investment and digital advancement, Fidelity ADT continues to strengthen its industry-leading position, but the company does not forget how much dependence is placed on traditional manned-guarding services and is not prepared to move away from this offering anytime soon.

“Manned-guarding will remain part of the product portfolio for the foreseeable future, however, like any company looking to flourish in an environment where technology is evolving at a rapid pace, Fidelity ADT remains on the cutting-edge of

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developments,” states Dale.

The fear in some communities is that their neighbourhoods are turned into militarised war zone-type areas, with heavily armed vehicles and guards patrolling 24/7. This is where specially developed digital offerings can assist.

“The brazenness and violence associated with robberies, ATM bombings, and cash-in-transit heists pose unique risks for South Africans, so an integrated solution is an essential part of a company’s arsenal in the war against crime. For example, ‘Fidelity Stratosphere’ was developed to compete in the ever-changing world of technological advancements.

// FIDELITY’S HELICOPTER UNIT AND CANINE SUPPORT UNIT HAVE ADDED TO ADT’S RESPONSE CAPABILITIES // This product-suite focuses on video surveillance, anti-cyber terror and proactive tracking,” details Dale.

“Fidelity Security provides ADT’s more than 350,000 residential and commercial customers with an

FIDELITY ADT

CEO Fidelity Security Group - Wahl Bartmann

integrated security and guarding service in a localised environment.

Fidelity’s helicopter unit and canine support unit have added to ADT’s response capabilities,” he adds.

And it’s not just residential customers that see the value of a combined service offering.

Commercially, the company is responsible for contracts with major international brands and utilises its full portfolio to deliver first-class service.

Fidelity ADT’s customer base includes the likes of FNB, Nestle, Curusana, Grand West Casino, Hyundai, Makro and Tygervalley Country Estate.

“Fidelity ADT’s commercial offering

includes a locally produced motionactivated recording system developed

by SecuVue. With the systems in place at commercial properties, the company can use facial recognition technology to compare images against a detailed database of ‘persons of interest’ when the need arises,” explains Dale.

“The system was built for the South African market to ensure seamless integration into existing control room infrastructure. Smart analytics algorithms automatically verify information, reducing the need for human intervention.

“Fidelity ADT Commercial also offers building management solutions

that can handle the complexity of interlinked systems and are agile enough to scale as more items become connected. The company provides tailor-made solutions to fit any configuration and keep up with the growing Internet of Things architecture. Fidelity ADT’s building management solutions utilises software developed by multinational company, Schneider Electric. This technology integrates different system operating protocols into one userfriendly platform to monitor, control and formulate reports, essentially enabling ‘smart buildings’.”

It is this combination of the

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INDUSTRY FOCUS: SECURITY

country’s most advanced digital offering, paired with a strong manned guarding team that upholds the company’s reputation as the best.

“Our airborne capabilities, more than two hundred community partnerships nationally, modern control rooms, and effective customer engagement all contribute to our unique selling point, placing Fidelity ADT a cut above the rest,” enthuses Dale.

SECURING A FUTURE The merger between Fidelity and ADT was the first step in the group’s futureproofing strategy. The new entity is 54.62 % black-owned and 100% South African. The group continues to invest in growth activity and also internally,

in its people, so that it remains in pole position atop the industry.

“The new entity aims to position itself as a leader in providing customers with an end-to-end solution from the individual in the residential space all the way to corporate asset protection.

There are exciting new developments in the pipeline,” says Dale.

“In May last year, Fidelity ADT welcomed KB Special Eye Security Services (in Jeffrey’s Bay) as a new member of the Fidelity ADT family.

“There are a few in-country footprint expansions into new areas, such a Klerksdorp and Ballito, which will continue as opportunities arise, however, there are no large expansions planned at present.

“In the retail sector, one of the new and exciting projects underway is the Polo RFID pilot, which includes new technology that is regarded as trailblazing,” he says.

Fidelity ADT’s 55,000 people are also regarded as important drivers of future growth and, as such, the company invests in training and development programmes to ensure its staff are prepared. “We will continue to grow headcount in line with additional contracts. The company has a number of long-standing technical learnership programs which has proven very successful,” says Dale.

He says that there are several examples within the business where employees who have started their

// THE COMPANY HAS A NUMBER OF LONG-STANDING TECHNICAL LEARNERSHIP PROGRAMS WHICH HAS PROVEN VERY SUCCESSFUL //

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FIDELITY ADT

careers on the front-line (as armed response officers) have undertaken training programmes and now work as line managers or heads of departments.

This type of investment has already brought success for the business. In November 2017, Fidelity ADT was named winner in the Security and Armed Response category at the 2017/18 Ask Afrika Orange Index Awards. “In our business our product is defined by the quality of our people,” said Rob Dale.

In May 2018, Fidelity ADT’s south coast branch was awarded two Diamond Arrow awards in PMR. africa’s KwaZulu-Natal Leaders and Achievers survey. The company was labelled ‘the best security company’ and ‘the security company doing the most to fight crime in the region’. The company’s Western Cape division was also successful, claiming a further

two Diamond Awards in the PMR. africa Western Cape Provincial Survey Business Excellence Awards.

“As an organization, we continue to invest in both the training of our staff as well as the technology we use in everything we do. The end-goal will always be the safety and security of our customers. These two awards tell us we are on the right track,” said Fidelity ADT’s Regional Executive: Coastal, Adrian Good.

This exciting, growing industry is in need of organisations like Fidelity ADT; organisations that invest in worldclass solutions to deliver services to clients, helping those clients to achieve their goals. While of course everyone wishes there was no need for a private security industry, the facts dictate that it is an industry that is required. So, it pays to partner with the best.

“Fidelity ADT has built up a

long track record of community engagement and support which sets it apart from competitors. People see Fidelity ADT officers patrolling their streets and keeping an eye on their neighbourhoods,” says Dale.

“Fidelity ADT is an industry leader with years of experience and the trusted support of the communities we serve. There remains a strong demand for armed response services in a country with a high crime rate like South Africa where house robbery is the most feared type of crime. The Fidelity ADT merger expands the scale and scope of services to customers, giving the new entity the competitive edge,” he concludes.

WWW.ADT.CO.ZA

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SWARTLAND

Opening the Door of

Opportunity PRODUCTION: Manelesi Dumasi

Swartland has repositioned itself, becoming South Africa’s building materials supplier of choice.

The business, which started out as a single DIY store in the Western Cape, is now investing heavily into people and product range development in order to prepare for further growth.

Third generation family leaders talk to Enterprise Africa about the success of the company.

//

The Hanekom family has been inextricably involved with the 67-year old Swartland business since its inception. Founded

by Oupa Hanekom in the small town of Moorreesburg in the Western Cape, this family-run business has been through many changes and challenges.

Oupa started his small building

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materials, electrical and DIY store in 1951 before passing the business to his son, Oom Jurgens, when a new lease of life was bought to business, transforming to become a wooden products business focussed on windows and doors.

Swartland grew, becoming known for quality and reliability. But following years were tough for South African businesses

and the company stumbled, eventually falling into the hands of the third generation. This was when the growth story kicked into top gear.

Today, Swartland is run by Hanekom brothers Jurie (Chairman), Hans (CEO) and James (CFO). When Jurie got involved in 1988, things changed for the better. “When Jurie

Clockwise from top left: CFO - James Hannekom / Chairman - Jurie Hannekom/ 2nd Generation leader - Oom Jurgens Hannekom / CEO - Hans Hannekom

INDUSTRY FOCUS: MANUFACTURING

took the business, it was on the brink of bankruptcy and he has turned it into a billion Rand company,” says Hans.

“He turned it to what it is today – a window and door business that supplies other building related products. We only supply to builders merchants. Jurie took the business mainstream, taking products into the main builders merchants and starting the export division which reaches into the UK and US.” The business is no longer isolated, a long way from the country’s urban centres; Swartland is a sought-after manufacturer and supplier, vital to the South African building industry. Today, operations are widespread but directed from Atlantis, Western Cape.

Atlantis was officially granted Special Economic Zone (SEZ) status in June which means it will become a technology hub, specifically for green tech, and is expected to receive R1.8bn of investment by 2022.

Now that Swartland is established and recognised as an industry leader, new opportunities are being explored so that the growth of this specialist, highlyskilled business can continue to flourish.

“Our theory is quite a simple one.

If our truck is stopping at a builders merchant, whatever that warehouse takes, we could put on the truck and sell to them. We took that decision and since then, we have moved into the polystyrene business, insulation boards, garage doors, showers, awnings, and the PVC window and door market. We are looking at multiple market segments to get into,” says Jurie.

“We’re currently looking at the insulation market,” adds Hans. “We like the idea of the roofing sector. That’s things like insulation, roofing boards, PVC ceiling boards, and polystyrene ceiling boards. We are not yet active in that sector and that will be a leap on our side.

“Our entry to that market will likely be a combination of import, acquisition and manufacturing ourselves. It fits our distribution model. Swartland is known

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within the industry as a company that delivers a quality product and has a good delivery rate, always delivering on time and in full. We’re known for our service model and that’s all over South Africa. Even the smallest, most remote town in South Africa can expect a Swartland vehicle within seven days – and that is unusual for our industry. We feel that there is a need in that segment for that type of service and it fits our distribution model.”

If Swartland’s move into the insulation market proves successful, a builder could almost put together an entire house, sourcing materials from Swartland alone. Successful expansion would come as welcome news for the communities in which Swartland operates (Atlantis is a good example, where unemployment remains high).

“Entering new segments with new products and new product categories, we would need to open more factories and employ more people. We will definitely be bringing on board more employees, it’s just a question of how many and where,” says Hans.

BUILDING PEOPLE As well as manufacturing superb products, Swartland has manufactured a culture of excellence within the business. 1500 employees strong, the company invests in people to secure its future.

“There is a legacy here with the family,” admits Jurie. “We’ve had opportunities to sell the business, but we have a commitment to the people.

Concern about what a new owner would do with the people is perhaps the reason why we have not sold. Profit is of course key, but Swartland has around 1500 people across the country and there’s a sense of duty to those people,” he adds.

Investment into people is also an investment into products – the more your staff know about the portfolio, the easier it will be for them to assist customers. This mantra, combined with something of an obligation to the areas that it calls home, has ensured Swartland commits heavily to upskilling.

“With Swartland, because of where we are based, we feel that we have

// EVEN THE SMALLEST, MOST REMOTE TOWN IN SOUTH AFRICA CAN EXPECT A SWARTLAND VEHICLE WITHIN SEVEN DAYS – AND THAT IS UNUSUAL FOR OUR INDUSTRY //

SWARTLAND

// WHERE ARE ABLE TO, AND WHERE IT MAKES COMMERCIAL SENSE, WE TRY AND MAKE SURE WE OPEN MORE DOORS THAN CLOSE // a responsibility to train and upskill.

Atlantis is an example – it’s not in a good place from a people point of view.

We have a responsibility to ensure our factory there does well so that we can create employment for the town and surrounding area. Our investment there has paid off. Our workforce there is stable, and we think it is a highly skilled and productive group. We are trying to curb the skills gap by creating as many opportunities as possible for these towns,” says James.

“If that wasn’t the case, we might have closed these manufacturing plants years ago. Where we are able to, and where it makes commercial sense, we try and make sure we open more doors than close,” he adds.

Can anyone within the company climb the ladder and create a long-lasting career for themselves?

“Absolutely,” says Hans. “A big thing at Swartland is that we operate a simple model. If you’re willing to learn, we will provide all of the opportunities for you.

We tend to look for people who want to learn more. We also like to promote from within and create opportunities for our own people.”

The skill and knowledge of Swartland’s national workforce has helped it achieve success that others could only dream of, proving that investing in people yields results.

“Getting into the export markets of the USA and UK, and doing that successfully for so many years, is definitely a flagship moment for a South African business,” says Hans. “We started exporting in 1992. We probably

have the largest distribution centres in South Africa from a window and door perspective. We opened two 13,000 m2 distribution centres in 2008 and those were big moments for us. We launched our aluminium business in 2015 and that was very important.

“In 2015, we took the decision to move from a wooden window and door business to be simply a window and door business. In 2017, the decision was taken to no longer be a window and door business and become a supplier of buildings goods.”

CONSTRUCTING AFRICAN BUSINESS Swartland has reached the fortunate position of being able to export from South Africa to other international markets. Many SA-born players only dream of getting to this position.

“We play in most of the SADC

countries,” details James. “We have a branch in Namibia, we want to do more in Zimbabwe and Botswana, and we are active in Mozambique. We think Zimbabwe is going to be a good growth business within the next two to five years, and we want to be a part of that.”

African business combined with exports to the USA and UK make for an extremely positive future outlook.

“Currently our exports are up and down. When the US economy does well, we do well. When the economy is suppressed, that impacts us too. Even though that market is 60% of what it used to be, it’s still a nice market for us to be in,” says James.

Currently, the company will not consider expansion further north into Africa, and other obvious international markets are too easily served by South Africa’s rivals. But, “we will always look

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INDUSTRY FOCUS: MANUFACTURING

at global opportunities, but only pursue where we know we can be competitive,” says Hans.

Growing outside of South Africa has its challenges. Exchange rates are an ongoing concern for any import/ export business, and South Africa’s Rand pricing has long been a worry for companies like Swartland. Since 2010, the Rand has been unpredictable. “In the world market, South Africa remains a small player,” says Jurie. “South Africa doesn’t compete very well.”

Big consumers are easily attracted by basement prices from competitors in other regions. “The US is a good example, specifically for wooden products,” says Jurie. “We compete with South America and they are much closer and have their own resources.

In Australia, China is much closer and difficult to compete with. We have a very good workforce here and our cost of production is negated by currency.”

But Swartland is also an importer.

So, if the currency swings and exports are disturbed, imports can grow.

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The company imports some of its products and simply brands them inhouse. This is an essential part of the company’s growth strategy, along with acquisitive activity.

“It’s either an import programme that we would follow, where we source the product from elsewhere and import on mass to our warehouses, and then distribute it under our own brand.

Or we would acquire a business and bring the knowledge to our business, eventually manufacturing ourselves and selling through our distribution system,” says Hans.

Is the growth strategy working?

According to the Hanekom brothers, things are working out well. “The last four years have been good if you compare us to others,” says Hans. “But that is only because of our willingness to change and our ability to have different products in different market segments. Had we not done that, we would have ended up exactly like everyone else. Our commitment to people in the past and their

commitment now, and our expansion into new products, definitely helped us be more robust to the market dynamics.”

DISTRIBUTION FUTURE? With Swartland’s past and present positioning the organisation strongly for future growth, the bothers in charge hint at a shifting in structure for the business.

“We believe that we are turning into a distribution company more than a manufacturing company,” explains Jurie.

“We believe that will help our longevity.

In order to stay ahead means that we must improve all the time.”

Hans agrees: “It will help us to be more robust and be able to handle various economic situations without too much reliance on one sector or one market. Let’s say windows and doors has a dip, we want the other segments to carry it. The future of our business is to be more diverse and we think that we have a very good model to sustain us into the future.”

SWARTLAND

// WE ARE FIRM BELIEVERS IN THE NEW GOVERNMENT AND THE NEW FOCUS IN TERMS OF JOB CREATION AND SETTING SOUTH AFRICA IN A POSITIVE LIGHT // Not yet challenged by a serious competitor, and not fazed by smaller players in individual markets, Swartland has the luxury of being far out in front of the chasing pack. Its focus on quality service and being able to maximise its distribution capabilities will keep it ahead says James.

“The biggest challenge to any organisation is your ability to service that market effectively, on a national

scale. It’s not easy to service this market – there’s a lot of roads and can be thousands of kilometres between each destination. That is a big barrier to entry.

We have invested a lot of money into making sure we can service the entire country effectively across the board.

Sooner or later, competitors will get into our space but it takes a lot of time and money to get to where we are – not a lot of people are in the business of making profits that can sustain a distribution model like ours,” he says.

Remarkably, the growth and positivity realised by the business in recent years has come through a difficult time for South Africa. The economy has struggled from a GDP growth perspective, international credit agencies have downgraded the country, the currency has struggled, but positive sentiment has returned since a change in political leadership. With business and investor confidence seemingly returning to the country, now is a promising time for South Africa, and

Swartland is very much behind the development of the country.

“We are firm believers in the new government and the new focus in terms of job creation and setting South Africa in a positive light. We are not pro-individuals, but we are pro-South Africa. We are entrenched behind anyone that creates jobs and puts South Africa first,” says Jurie.

This is a company that follows a ‘Think Long Term’ vision. Whether it’s longevity of products, sustainability of raw materials, length of relationships, or commitment to South Africa – Swartland is thinking long term. This is a company that started small but is now thinking big. And it remains in the committed hands of the Hanekom family, as it has for almost seven decades.

WWW.SWARTLAND.CO.ZA

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MACNEIL PLASTICS

Long Lasting, Superior Quality From MacNeil Plastics PRODUCTION: Manelesi Dumasi

Cape Town’s MacNeil Plastics is looking to capture market share with new products and superior quality. The company has partnered with a European specialist to bring the very best to its South African customers. Managing Director, Derek Faulds talks to Enterprise Africa about the company’s strong position. www.enterprise-africa.net / 67

INDUSTRY FOCUS: MANUFACTURING

//

“It’s a very exciting time at the moment,” says MacNeil Plastics Managing Director, Derek Faulds.

Since separating from the MacNeil Group, which handles wholesale and distribution of a range of building supplies, MacNeil plastics has forged new relationships with international partners in order to bring first class quality and service to clients in Southern Africa.

Founded in 1993 as part of the MacNeil stable, MacNeil Plastics has built its reputation over the years, becoming known as a leading manufacturer of plastic pipes and fittings within the PVC (polymerizing vinyl chloride) civils and merchant industries. Headquartered in Somerset West, Cape Town, MacNeil Plastics works from a large, ISO-certified

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manufacturing facility that operates 24 hours a day, throughout the entire year.

The company’s more than 300 people are highly experienced and knowledgeable with the product portfolio and have managed to develop market share in regions all over Southern Africa.

“We export around 5% of our product to other African countries including Namibia, Botswana, Mozambique, Zimbabwe but the majority of our production is for the local South African market,” says Faulds.

But, while he is keen on developing the company’s exposure to the export market, Faulds explains that MacNeil Plastics has developed a partnership with European manufacture to bolster its already impressive product range.

“Technology in the industry is developing,” he says. “Companies in

Europe have made great strides in terms of oriented PVC (OPVC) and we have a partnership with a Spanish company called Adequa with whom we import OPVC. The development of polymer plastic is obviously trying to improve the image and make plastics more acceptable considering the current environmental challenges in packaging. From a plastic pipe point of view, we manufacture a product that is 100% recyclable and we want to make plastic a completely viable alternative to concrete or steel or other products. Technological development continues but there are limitations to the amount of innovation that you can achieve – a pipe is a pipe – but longevity, resistance to corrosion, ability to resist elemental and chemical attack which effects flow, and other factors are all things that we work on continually with our partners in the market.

MACNEIL PLASTICS

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We offer a full range of services associated with:

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// WE WORK WITH OUR CLIENTS ALL THE WAY UP UNTIL THE POINT THAT WE PASS THE PIPE OVER TO THE CONTRACTOR FOR INSTALLATION // “We have only been working with Adequa for a few months and we are now their preferred distributor into Southern Africa for OPVC. OPVC is the top of the range and you can make a pipe that can hold an equal amount of water but using less plastic. Adequa have got the machinery and technology to make OPVC and we hope to gain that ability in time.”

LONG LASTING QUALITY At the end of 2017, South Africa’s struggling economy was at breaking point. Viewed by international investment houses as a risk, and

downgraded by credit agencies, the country was in something of a rut. But, following the appointment of President Ramaphosa, business confidence has improved and the landscape for commercial activity has improved.

But Faulds says that the quality of MacNeil Plastics products and services has moulded the company into an industry leader, irrespective of economic plight.

“We differentiate ourselves by quality,” he says. “There are a number of pipe manufacturers in South Africa but we are members of

SAPPMA (Southern African Plastic Pipe Manufacturers Association) and I serve on the Board of that association.

Our adherence to quality standards and specifications is absolutely nonnegotiable. Our customer service and our delivery to site is first class. We work with our clients all the way up until the point that we pass the pipe over to the contractor for installation.

Where possible, we try to give advice on the appropriate pipe for use in the project. We are not simply a manufacturer who makes the pipe, hands it over and washes our hands of it; we want to see things through until completion.”

The company ensures quality throughout its product range by sourcing the best raw materials and components from all corners of the world. Where a leading material is not

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INDUSTRY FOCUS: MANUFACTURING

// WE ARE LOOKING TO INCREASE OUR OUTPUT CAPACITY BY 30-50%. WE’D ALSO LIKE TO CREATE 10% MORE JOBS // available in South Africa, reducing quality is not considered. The company searches out exactly what is required.

“We get a lot of raw materials from Sasol – our local manufacturer, but we’re also importing raw materials from a variety of locations around the world. We stay away from China but

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we do import from Thailand, Malaysia, the Middle East, Europe, and North America as long as they can deliver quality,” explains Faulds.

Providing products of the highest possible quality does not only bring benefits to MacNeil Plastics and its clients; it is also advantageous to the wider community in which the

products are utilised.

“We are based in the Western Cape and we are going through one of the worst droughts we have faced in the past hundred years,” details Faulds. “We are very dedicated to responsible water usage and responsible purchasing of water management systems, which includes pipes, so we try to differentiate ourselves through quality of service.

When the quality is there, less water is lost through inefficient piping.”

MANUFACTURING A STRONG FUTURE MacNeil Plastics is a now standalone pipe manufacturer and thanks to its frequent and sustained delivery of quality products and services, it is now positioned perfectly to grow.

Faulds, who has been with MacNeil Plastics for three years and was previously with the MacNeil group since 2009, sees increases in export and manufacturing capacity as key focus areas for the future.

“We are looking to increase our output capacity by 30-50%. We’d also like to create 10% more jobs on top of what we offer the local community. We

MACNEIL PLASTICS

want to upskill our staff and address the skills shortage in the industry. We also want to serve the South African mining, construction and agricultural sector by providing them with quality piping, ensuring water security.”

He adds that excess capability in the factory is likely to be taken by export demand, saying: “We are aiming to grow our export market.

We have just appointed a new Sales Director and exports will be one the major focuses. We have excess capacity in the plant so we are hoping that exports will become around 20% of our sales by the end of the year.”

And new product development is always a focus. New products for this year include a range of microcellular polyvinyl chloride (mPVC) goods.

“We are involved in the supply of all of the pipe for a development in the Hex River Valley. We’ve also just launched our MPVC range of pipes for the market. Previously, we only made UPVC and so adding the MPVC means we cover both ranges, in all sizes from 50-400mm,” explains Faulds.

Going forward, the future looks

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strong for MacNeil Plastics. The company is facing its challenges head on and investing in training and selfsustainability to ensure it overcomes any unpredictable hurdles.

“The biggest challenges we have faced is managing the procurement of appropriate raw materials. In South Africa, we had a period where we experienced major load-shedding and that was a big challenge for us.

// OUR ADHERENCE TO QUALITY STANDARDS AND SPECIFICATIONS IS ABSOLUTELY NON-NEGOTIABLE //

We are also faced with a major skills shortage in terms of working with polymer plastics,” says Faulds.

The company’s reputation and undoubted skill set will stand it apart from the crowd, and with ever-growing demand for products showing no sign of abating, MacNeil Plastics is perfectly placed to continue its flow across the entire South African market.

WWW.MACNEIL.CO.ZA

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LETŠENG DIAMONDS

New Letšeng CEO Celebrates

910 Find PRODUCTION: Karl Pietersen

In February, Letšeng Diamonds welcomed its new CEO, Mr Kelebone Leisanyane. This experienced leader is excited about the future at the world’s highest dollar per carat kimberlite diamond mine. He talks to Enterprise Africa about large stones and new technology.

//

When Letšeng Diamonds new CEO, Kelebone Leisanyane started in his new role, he could not have dreamt of a more positive beginning to his new career.

Letšeng’s part-owner, Gem Diamonds, released a strong set of annual results for 2017, detailing a 12.9% increase in revenue. Letšeng had just discovered one of the largest stones in its history. It’s mining complex relocation was nearing completion, and the mine was starting 2018 off the back of a strong 2017 with several large stone recoveries.

“I joined the organisation on Feb 12th and it has been very hectic,” he

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tells Enterprise Africa. “It has been very exciting because its new – it’s like a breath of fresh air.”

Leisanyane was previously in charge at Lesotho’s National Development Corporation and is well-experienced in the investment promotion environment. He is an industrial engineer by training, having graduated from University College in Galway, Ireland. After returning to Lesotho, he worked in the flour milling and brick manufacturing industries before joining the investment promotion environment. He has also held directorship positions at large organisations including Standard

Lesotho Bank, Lesotho Revenue Authority, Econet, and the Centre for Accounting Studies.

CELEBRATING 910 In January, the Lesotho Legend was discovered at Letšeng – the latest in a string of major discoveries, reinstating the reputation of Letšeng diamond mine as one of the world’s most significant mining operations.

The 910 carat Lesotho Legend is a high-quality 910 carat, D colour Type IIa diamond, believed to be one of the largest found in history.

“The 910 has really been a source of excitement for Letšeng,” explains Leisanyane. “We sold the diamond in

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INDUSTRY FOCUS: MINING

Belgium and achieved US $40 million. We are starting a project, named the 910, as a social responsibility initiative and we are very excited – it was a really great find for Letšeng as the fifth largest diamond in the world.

“This has been an incredible year for Letšeng because, following the 910, there was a 69 and a 51, and we have also seen a number of other large finds. This could be the best year of the company yet.”

Gem Diamonds CEO, Clifford Elphick said: “This is a landmark recovery for all of Gem Diamonds’ stakeholders, including our employees, shareholders and the Government of Lesotho, our partner in the Letšeng mine.”

Back in June 2017, Enterprise Africa spoke to Leisanyane’s predecessor, Jeff Leaver (who remains an advisor

// THE 910 HAS REALLY BEEN A SOURCE OF EXCITEMENT FOR LETŠENG. WE SOLD THE DIAMOND IN BELGIUM AND ACHIEVED US $40 MILLION // to the CEO) about earlier fantastic large discoveries. “Every large stone is significant,” he reminded. In 2017, Letšeng unearthed a 104.73 carat diamond, a 151.52 carat Type I yellow diamond, a 80.58 carat stone, a 98.42 carat diamond, and a 114 carat gem.

“With the major discoveries of the past year, the expectation is that more big stones might come up before financial year-end, but the nature of the industry shows that you cannot just extrapolate so I cannot suggest that we expect more big finds. But we do have high hopes,” admits

Leisanyane.

The result of big stone discoveries is major for Lesotho. Diamond mining is one of the largest contributors to government tax revenue, and the industry is a major employer. But it is success in the CSR space that really highlights the value of stones like the Legend.

“We contribute regularly to CSR projects and we regularly carry different focus areas, but following that exceptional find, we felt we must dedicate some of the proceeds to the development of projects that will assist our communities. The 910

// ECONET Telecom Lesotho (ETL) Econet Telecom Lesotho (ETL)’s position as the partner of choice in the Mountain Kingdom is affirmed by its ability to respond to every call for broadband services from government and businesses regardless of their geographical location. “We understand that communication services have become pivotal tools for businesses operations and lifeblood of their growth”. Lebohang Ramaisa, General Manager Enterprise Business says. “Econet is committed to investing in infrastructure that contributes positively in building sustainable enteprises, improving government services as well as the lives of ordinary Basotho regardless of where they reside.”

This strategy is apparent in the way Econet enables the Lesotho’s mining companies to have modern high speed broadband services in the very high mountains and deep valleys of this beautiful kingdom. These companies enjoy high speed connectivity with their head offices and other partners across the globe at all times. GEM Diamonds’ Letseng Mine, despite being located deep in the mountains of Lesotho, has extreme demands for both speed and availability of their broadband services . Econet has been the partner of choice for Letseng and has managed to deliver a bouquet of services that allows Letseng to concentrate on its core business.

Econet has worked with Letseng to improve their efficient use of the existing investment on broadband services by deploying the advanced VoIP and Telephone Management System taking advantage of the twentieth century benefits brought by cloud based solutions. This solution enables the mine to modernize their communications services as well as their budgeting and reporting.

Ramaisa notes that recent trends and multiple studies have shown that the availability of reliable broadband services is one of the critical factors that investors and organizations consider before moving and setting up in an area.

“That simply means areas that do not have broadband services are normally left behind in terms of development and businesses in those areas are not able to perform to their full potential” Ramaisa explains.

Econet is fully committed to assisting Lesotho businesses reach their potential despite challenges that the terrain and Lesotho’s extreme weather may pose. We invite all enterprises and businesses to talk to us about their communication challenges and we are confident that we have the right solutions to enable their enterprise.

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T’s & C’s apply

www.etl.co.ls

INDUSTRY FOCUS: MINING

project will receive approximately LSL 5 million,” says Leisanyane.

The Letšeng mine is famous for the production of large, top colour, exceptional white diamonds, making it the highest dollar per carat kimberlite diamond mine in the world. Since Gem Diamonds’ acquisition of Letšeng in 2006, the mine has produced four of the 20 largest white gem quality diamonds ever recorded. Its CSR spend is focussed around five key areas – education, health, infrastructure, development of sustainable SMMEs, and regional and environmental initiatives.

Letšeng is one of the highest diamond mines in the world, at an altitude of over 3100 metres high in Lesotho’s Maluti Mountains. Often, expert climbers start to feel the effects of altitude sickness at 1500 to 3500 metres, and when the eye-watering price of the 910 Legend was announced at US 40 million, no doubt some of the auctioneers felt queasy with happiness.

“We use Antwerp as our selling office and certain clients are invited to bid. You can view the diamond prior to bidding but only a selected, verified, reputable

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group would be invited to view. Then, obviously, the highest bid takes the stone home and that is exactly what happened with the 910. We are delighted with the entire process,” says Leisanyane.

SPARKLING FUTURE At the start of 2017, Letšeng began the process of relocating its mining complex so that pit mining space could

be maximised. Mining workshops, offices and related service buildings were all moved so that larger mining equipment could access the pit to carry out a revised mining plan, which started in February 2017. This expensive but necessary programme is now all but complete and Leisanyane is satisfied with this futureproofing strategy.

“It’s practically complete - more than

LETŠENG DIAMONDS

// IT IS THE TECHNICAL EXCELLENCE OF OUR FACILITY AND THE HARD WORK OF OUR PEOPLE THAT BRINGS US LUCK // 200 million has been spent. I was recently at the mine and toured the complex.

Everything is almost complete and our people will soon begin taking occupancy.”

He is keen to point out that his staff are the reason for the recent upturn in fortunes and discovery of large, significant diamonds.

“Luck does not come into play,” he laughs. “We have a kimberlite deposit which is expected to have diamonds in it. We are looking in an area that is designated as a diamond area; it is the technical excellence of our facility and the hard work of our people that brings us luck.”

In the future, Letšeng has a plan to further improve the technology it uses during processing so that value from diamonds is maximised. Currently, the value of some diamonds can be reduced when they are broken during sorting as Leisanyane explains.

“The biggest success for a mine like ours is not to break diamonds,” he says

“Breaking diamonds destroys quality so looking forwards, we are exploring a technology through which we should be able to see if a rock contains diamonds before we crush the rock. If we can see a diamond, we can isolate the rock and use a different technology to dislodge the diamond. I think this is the future for Letšeng as right now we reduce the rock by breaking it and that can result in broken diamonds which destroys a lot of value. We have the process where we can feed mined ore through x-ray technology to see which rocks have diamonds and I think this will be helpful for our future.”

Last month, the government of Lesotho announced plans to renew the mining license currently held by Gem Diamonds at Letšeng. The new license would take the miners agreement to 2034 and could potentially go even further if additional underground resources are deemed economically viable.

“The Lesotho government’s announcement that they intend to

renew the Letšeng mining lease until 2034 is welcomed as a demonstration of the positive partnership which exists between Gem Diamonds and the government,” said Elphick.

“I would like to thank the government of Lesotho for their ongoing support which will allow Gem Diamonds to continue to extract some of the world’s largest and most valuable diamonds from this remarkable resource.”

Inextricably linked to the future of the industry in Lesotho and the future of the nation, the Letšeng diamond mine is truly an example to follow for others around the world. And if the new CEO has anything to do with it, Letšeng’s success will continue and grow, helping the mine to achieve its goal of pioneering mining in the Kingdom.

WWW.LETSENGDIAMONDS.CO.LS

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LET410

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SOLENTA AVIATION

The African Sky

Is No Limit

for Solenta Aviation PRODUCTION: Solenta Aviation

Johannesburg-based Solenta Aviation is growing its fleet, expanding into new territories, and building strong and lasting relationships with prominent clients.

“Solenta Aviation has an increasing global footprint and has a desire to expand upon that footprint,” Business Development Manager, Michael Adams tells Enterprise Africa.

//

The highways over the skies of Africa are slowly becoming more crowded as air traffic levels increase. At the end of 2017, a report from the International Air Transport Association suggested that air traffic over Africa could grow by as much as 8% in 2018. Africa is home to more than 12% of the world’s population but its air transport market represents just 1% of the global industry.

The aviation industry across the

continent is not an easy space to be in.

A combination of protectionist legal barriers and regulatory hurdles, mixed with inadequate infrastructure, high taxes, and stubborn nationalism make for a challenging passenger market.

Commercial flights are infrequent, expensive, and circuitous.

The size of the continent means that Africans wanting to travel should be looking to the skies – rail and road are underdeveloped. But there is a shortage of large airports,

major aircraft maintenance facilities, or training academies. So, while the skies slowly fill, there remains major opportunities for growth.

One company which has realised this after many years playing in the air above Africa, is Solenta Aviation.

Founded in 2000 to assist in the supply of ACMI (Wet) and Dry leasing, jet and turbo prop aircraft leasing, and full turn-key operations and management consultancy, Solenta Aviation has become an industry

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INDUSTRY FOCUS: AVIATION

leading service provider to the continent’s flight specialists.

The company is actively seeking growth opportunities all over the continent, and Business Development Manager, Michael Adams highlights relationships with leading companies as examples of how Solenta Aviation can help big-name businesses achieve goals in Africa.

“We are expanding our current support of a leading global logistics company – more aircraft, more services, and not just on the African continent, we are hoping to work with other local operators around the world where we can provide operators with aircraft and provide freighter support for the company,” he says.

18 YEARS FLYING HIGH When Solenta was founded, the company was a small operation providing services for a leading global logistics company. “We were supporting

ERJ135LR

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the company and their requirements by operating a small fleet of Cessna Caravans,” explains Adams.

“We continue to support the company 18 years later, and we have now migrated all the way through from Caravans to now operating and flying ATR72 Large Cargo Door freighters for them. We work in a number of locations on the African continent and provide the company with a number of aircraft for other parts of the world as well.”

And as the relationship flourished, Solenta Aviation’s reach grew. “Solenta Aviation is now a much bigger operation and is no longer just about servicing the global logistics company.”

MACH SPEED TO THE TOP Almost two decades of success have positioned Solenta Aviation perfectly for further growth in the future. Already active with operational bases in South Africa, Mozambique, Kenya, Gabon,

// OUR 50-SEATER ERJ 145 HAS SEEN PHENOMENAL DEMAND ACROSS THE AFRICAN CONTINENT // Ivory Coast and Algeria – and a presence across a number of other African and Middle Eastern countries – the company is keen to increase the size of its fleet and strengthen relations with its longstanding clients.

“The fleet will certainly expand, particularly in the regional space with regional jets and regional turbo craft,” says Adams.

Solenta Aviation provides aircraft into Cuba, it also supports oil and gas companies and NGOs in the Middle East, and there are many opportunities for Solenta Aviation to expand beyond the African continent.”

SOLENTA AVIATION

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// WE HOLD AIR OPERATOR CERTIFICATES IN A NUMBER OF COUNTRIES WHERE WE CAN PROVIDE SUPPORT TO MEET OUR CUSTOMER’S REQUIREMENTS // ECONOMIC ASCENT? Economic and political influences have wreaked havoc across a number of prominent industry sectors in Southern Africa over the past few years. However, 2018 has seen a shift in sentiment, with business confidence improving across the board.

Solenta Aviation’s African coverage has allowed it to fly high over any regional issues that might have grounded competitors.

“Our customer exposure in South Africa has been relatively limited.

Over the past few years, we have provided aircraft on lease to a few of the regional South African airlines.” says Adams.

“Because of our customer base being African continent wide, and increasingly global, local macroeconomic factors do not impact on our ability to do business.”

Environmental concerns have also become more prominent in the global aviation space, with international agreements put in place to reduce the level of carbon emitted by the industry. But Solenta Aviation is well-placed to advise clients on best practice to ensure efficiency.

The future for Solenta Aviation is bright. It is aiming for an increasing chunk of the continent’s $80 billion industry. “Our 50-seater ERJ 145 has seen phenomenal demand across the

African continent,” says Adams. “When our leases finish, we very quickly find new leases for those aircraft in Africa.”

The aviation industry in Africa is expected to triple in size over the next 20 years and the sky highways will become busier. Solenta Aviation is perfectly placed to help its clients navigate this shifting environment with minimal turbulence, creating a sustainable and thriving sector that effectively serves the continent.

WWW.SOLENTA.COM

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EXHIBITION CALENDAR

KEY UPCOMING EVENTS ACROSS THE INDUSTRY Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors.

MINE-ENTRA JULY 18 | BULAWAYO Zimbabwe’s most reputable mining, engineering, transport, building and construction exhibition.

Having been in existence for a successful 22 consecutive years, the expo has built a solid reputation of providing an integral business and networking platform. Regarded as “the platform” for meetings, networking, and sharing of innovative ideas, the objective of the expo is to bring together the cogs that make Zimbabwe’s mining sector continue to move forward.

2018 IRFA CONFERENCE JULY 29 | DURBAN The Institute of Retirement Funds Association will once again be hosting the largest annual industry conference in Africa at the International Convention Centre Durban, from Sunday 29 – Tuesday, 31 July 2018.

Traditionally, the event attracts more than 1500 key delegates each year, drawn from across the industry spectrum from service providers, through retirement funds to organised

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labour and legislators. The IRFA annual conference is quite simply where the decision makers come to share knowledge and trends.

This year’s conference is all about outreach, stakeholder empowerment and financial security and freedom, building on from previous conference themes and aligning these with the theory of human motivation and aspirations developed by renowned psychologist, Abraham Maslow.

KENYA TRADE SHOW JULY 12 | NAIROBI KENYA TRADE SHOW is the main international event for all trades.

Setting new highs for participation from over 15 countries and visitors from over 12 African countries, the event is all set for its exhibitors to meet serious buyers within the three days. The event continues to lead the way in showcasing the new products and technology not only to Kenya but also to its surrounding countries. The 16th edition of the show promises to be larger and more successful for its exhibitors than ever before.

TANZANIA INTERNATIONAL TRADE FAIR Saba Trade Fair Grounds – Mwl. J. K. Nyerere JULY 01 – 05 NIGERIA OIL & GAS Abuja International Conference Centre – Eagle Square JULY 02 – 05 PORT FINANCE INTERNATIONAL Sandton Convention Centre JULY 10-11 KENYA TRADE SHOW The Sarit Centre, Nairobi JULY 13 - 15 POWER-GEN AFRICA Sandton Convention Centre JULY 17 – 19 MINE-ENTRA Zimbabwe International Exhibition Centre JULY 18 - 20 AGRIWORKS POTCHEFSTROOM Trim Park, Potchefstroom JULY 26 - 28 2018 IRFA CONFERENCE Durban ICC JULY 29 - 31

THE JOURNEY TO AGRICULTURAL SUCCESS STARTS WITH A TRUSTED PARTNER

GRAIN MANAGEMENT EQUIPMENT UNIGRO FINANCIAL SERVICES HARVEST TIME INVESTMENTS HINTERLAND

At AFGRI, we strive towards constant progression, growth, innovation and forging our vision for food security in South Africa and the rest of the continent.

As your partner in agriculture we provide services across the entire grain production and storage cycle. We offer financial support and solutions as well as inputs and hi-tech equipment, supported by a large retail footprint. With our passion for development we have invested in the development of emerging farmers, through our Harvest Time Investments training programme to foster strong future farmers.

AFGRI, a member of the AFGRI Group.

www.afgri.co.za

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