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www.essentialbusinessmag.com|Issue 23

Opportunities for growth How Netafim grow more with less

Also in this issue: Drip-Tech p26 Assa Abloy p30 Paintcor p36 Malawi Airlines p48

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n this issue of we’re looking at the nuts and bolts of the African continental meta-economy, the specialised industries keeping everything running behind the scenes.

We start with Netafim S.A and DripTech, two companies on the frontline of the fight for a secure water supply. Assa Abloy Kenya and HPE Africa talk about being a specialist importers and distributors within Africa’s fastest-growing economies, while the founder of South Africa’s Paintcor has some lessons on building a business from scratch. We also look at two institutions of local government this month to assess the trials and successes of the public sector, starting with Nelson Mandela Bay Municipality and moving on to revisit the Kenya Ports Authority. Finally, we’re moving on to the transport sector, looking at both a direct operator, the resurrected Malawi Airlines, and an indispensable part of South Africa’s domestic vehicle supply industry, Sumitomo Rubber Group SA.

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Contents Operation Phakisa slow to take off 6 Now in its third year, Operation Phakisa.

assesses the progress of South African’s

Renewing livelihoods 10 This edition’s Expert Interview is with Andrew Barfour of the Ghana Energy and Access Project (GEDAP).

News round-up 14

Paintcor 36 A home-grown South African business, Paintcor has come a long way from a shed in Johannesburg. talks history with its founder and CEO.

The latest sector by sector business news from across Africa.

Sumitomo Rubber 42 A look at the South African arm of a major multinational and the complex logistics that go into keeping Africa rolling.

Netafim 18 talks to Netafim SA, a global leader in smart-drip and micro-irrigation systems

Malawi Airlines 48 Malawi Airlines is now taking to the skies once again under new management. assesses its progress.

Kenya Ports Authority (KPA) 54 revisits KPA two years on, seeing what’s changed, what’s been achieved and what’s still to be done.

Drip-Tech 26

HPE Africa 60

Drip-Tech uses economical products and intelligent design to overcome hydroengineering challenges. finds out more.

South Africa’s sole source of high-quality Hyundai heavy equipment is a vital lifeline for dozens of mining and construction projects across South Africa.

Nelson Mandela Bay Municipality (NMBM) 66 A look at NMBM, assessing job creation, finances and power supply as part of a study of what keeps Africa moving.

Assa Abloy 30

Ingula 72

A market leader in door locking and access control technology, Assa Abloy has a lot to teach African businesses about finding a niche and owning it.

Online after delays and difficulties, South Africa’s Ingula Pumped Storage project may hold the key to fortifying South Africa’s struggling power grid.

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On Operation Phakisa Started in 2014, Operation Phakisa is the South African governmentâ&#x20AC;&#x2122;s effort to fast-track the implementation of its National Development Plan, a series of massive investment and development efforts across every element of South African society. The project is now in its third year, although progress so far looks to be somewhat underwhelming.

to take oďŹ&#x20AC;

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OnTopic

s a country on multiple major trade routes with 3,900 kilometres of coastline on three sides, South Africa has massive potential as a trading nation. In 2010, however, the ocean contributed just R54 billion (4.4% of GDP) and 316,000 jobs to the South African economy. Estimates from the South African government suggest that this could rise to

between R129 billion and R177 billion with double the number of jobs by 2019 and one million by 2033, and this has been a key focus area for Operation Phakisa. In a recent address, President Jacob Zumaâ&#x20AC;&#x2122;s address gave some promising details and figures. Phakisa has produced investments worth R24.6 billion from government contributions of R15 billion, and 6,500 new jobs have been created.

Several projects, including one at the port of Durban building specialist tug boats (a R1.4 billion project that produced 500 jobs) demonstrate South Africaâ&#x20AC;&#x2122;s capability in building specialist vessels and technology. Seven of the boats have already been produced with two more to go. Similarly, the KwaZulu-Natal Boatbuilding Park at Bayhead in Durban will be the largest shipbuilding park of its kind

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in Southern Africa, requiring R250 million in investment and producing up to 150 boats annually, mainly for export. Further development continues at Port Nolloth, on the northwestern coast, which has seen a R39 million rehabilitation project to refurbish the jetty, quay and fender systems and infrastructure, as well as constructing new coastal defences. This will allow the port, originally built by the diamond company De Beers, to develop its economic potential as a trading hub. Other projects are underway at Mossel Bay and the Ngqura liquid bulk terminal.

18 schools in KwaZulu-Natal offer maritime subjects. A new South Africa International Maritime Institute has been launched at Nelson Mandela University. Part of this research will go towards supporting sustainable development: reducing marine pollution, managing and conserving coastal ecosystems and addressing ocean acidification. In addition, improvements to coast guard and security will help cut down on illegal traffic in South African waters.

Promises and potential Zuma also described plans and proposals to build small but modernised local harbours and ports to open local economic opportunities and boost small coastal economies. Marine and coastal tourism was another major focus, building sustainable and world class resorts, parks and settlements to draw more outside capital into South Africa. The Coastal and Marine Tourism Lab, a think tank approved by the Cabinet, will help develop this sector.

Efforts to boost South Africa as a research centre are also under consideration, as are efforts to provide skills development to support new industries, and additions to school and university curriculums on marine subjects are being considered. Currently

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â&#x20AC;&#x153;In 2010, however, the ocean contributed just R54 billion (4.4% of GDP) and 316,000 jobs to the South African economy

Fuelling further growth Meanwhile, South Africaâ&#x20AC;&#x2122;s energy sector remains underequipped and incapable of supplying the countryâ&#x20AC;&#x2122;s growing needs. Attempts to fi x this have led to a variety of controversial deals and wild investments,

OnTopic

but there is an underexploited potential solution off the country’s coasts in the form of estimated oil reserves. Oil exploration and exploitation in South Africa has been underutilised, with potential investors turned away by political instability and the country’s regulatory environment. The Energy minister is expected to begin proposals to alter this legislation to ensure that South Africa can attract more investors, but that’s not the only bait being dangled to draw in the likes of Shell and BP.

within a few days by ship to these waters,” she continued. “This presents a good opportunity for ships and rig repair, and, through Operation Phakisa, SA is fasttracking the delivery of rig repair infrastructure.”

Operation Phakisa also includes plans for Transnet, the country’s state-owned logistics group, to build an R10 billion jetty and deep sea oil rig repair quay at Saldanha. South Africa’s deputy transport minister Sindisiwe Chikunga, who noted that South Africa is in a good position to support growing production areas and that exploiting that could be crucial.

Concrete progress

“South Africa is situated on one of the busiest international sea routes, which places us in a critical position in terms of international maritime transportation. Our geographical location presents a huge opportunity for investing in a diversifi ed maritime market. “Our proximity to the growth markets of the offshore oil and gas markets on the east and west coast (of Africa) mean we are

Once oil companies are regularly moving their assets to South African ports for refi ts, the hope is that they’ll be incentivised to begin exploration in South Africa’s territorial waters and support the country’s so-far-stillborn domestic exploration sector.

“Meanwhile, South Africa’s energy sector remains underequipped and incapable of supplying the country’s growing needs

Regardless, while Operation Phakisa and the National Development plan have produced a number of good ideas, plans and theories, the amount of concrete progress on display is relatively limited. Streamlining, counter-corruption, and interdepartmental cooperation (as well as cooperation between government, corporate and industrial stakeholders) has produced a much more dynamic marketplace of ideas, but as yet few have been fully put into practice. Furthermore, with the Zuma government in perpetual political crisis, long-term planning and forecasting is a risky business and both international investment and local political will may not be easy to source.

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Expert

RENEWING LIVELIHOODS

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The World Bank-backed Ghana Energy Development and Access Project (GEDAP) provides grants to developers of renewable energy generation projects for the benefit of communities outside the main national grid system. Here, project coordinator Andrew Barfour tells about the mini-grid program that will bring power to a number of communities for the first time. Tell us a bit about the work you do in the renewable energy space. What about this work most invigorates and inspires you? Currently we are coordinating and promoting innovative renewable energy solutions in Ghana on behalf of the Government of Ghana. Interventions span off-grid standalone installations for public, private and commercial establishments, mini-grids for island communities, utility scale RETs, policies and strategies and raising funds for key public sector led projects. What invigorates us about this work is the livelihood transformation in the areas of education, health, entertainment, information and economic empowerment that we witness daily in the lives of beneficiaries as a result of the off-grid initiatives undertaken. In addition, we are inspired by the opportunities and order that is created through the policies that we help create. Key

achievements on the policy and law side include mini-grid policy, the Renewable Energy Act 2011, Act 832, and Feed-in-Tariff Policy rate setting instruments, among others.

Can you briefly explain what makes the GEDAP mini-grid projects noteworthy? The GEDAP mini-grid projects in Ghana are island based mini-grid systems providing 24/7 electricity supply for five communities. These projects are community based and its benefits go beyond just the provision of electricity for households and businesses. Mini-grids when well developed as in the case of the GEDAP mini-grid project provide a more sustainable, permanent and efficient way of electrifying off-grid communities in the long term. The GEDAP mini-grid project incorporates an Energy Daily allowance prepaid mechanism which ensures no beneficiary defaults and expected incomes can be well projected.

What are your views on the potential of small, off-grid projects to be the most effective way to expand access to electricity in Africa, where energy poverty is vast and many people live in remote locations? Most of Africaâ&#x20AC;&#x2122;s population without energy access resides in remote communities far from the grid and in most of these communities the houses are separated from each other by farm lands making small offgrid projects most effective. In addition, in some countries like Ghana, some of the population without energy access live on islands and require huge investments to electrify them by the grid. In these cases off-grid projects including mini-grid projects provide a more effective alternative.

â&#x20AC;&#x153;Off-grid solar powered irrigation activities will surely lead to significant growth in agriculture which is an important economic activity in Africa

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However, in some cases, off-grid solutions just provide the most basic modern energy service. Thus, such interventions do not provide the needed impetus to unlock tangible socioeconomic developments in the off-grid communities.

Can you provide statistics or facts on the cost saving, environmental positives and increased reliability of off-grid products in comparison to diesel and kerosene power sources? Off-grid products including lanterns have been found to have a payback period of between six months to one year in most cases and provide cost savings of between 35% to 60% in the long run. With prices of off-grid projects generally on a decrease while prices of kerosene and diesel are on an increase in most African countries the opportunity for cost savings is even improved. Apart from the cost saving, kerosene is also dangerous to the userâ&#x20AC;&#x2122;s health. The fine particles in kerosene fumes are known

to cause chronic pulmonary disease whilst the burning of kerosene also produces carbon-dioxide emissions that also change our climate. New versions of off-grid products are generally very robust, with longer lasting battery lives and they offer warranties up to five years while the kerosene lantern technology is more than a century old and is prone to smoking wicks and glass cracks. Off-grid products also generally provide more reliable uninterrupted power supply compared to diesel or kerosene power sources due to improvements in battery and other energy management technologies.

What are your views on the contribution that off-grid solar solutions are likely to make to economic growth in Africa over the next decade. With the advancements in technology in terms of longer battery life, more robust designs and energy efficiency in addition to reduction in prices, off-grid solar is expected to make significant contributions to economic growth in Africa.

â&#x20AC;&#x153;The non-traditional financing sector should also be encouraged to develop schemes to support the solar industry

It is expected that small businesses (cold stores, corn mills, etc.) running on off-grid solar solutions will be created in many rural remote communities across Africa. One area that off-grid solar is expected to make signifi cant contribution to economic growth is the area of agricultural irrigation. Off-grid solar powered irrigation activities will surely lead to signifi cant growth in agriculture which is an important economic activity in Africa.

How can the challenges of a shortage of finance in solar, slow production of solar devices, and hesitation from policymakers regarding solar (and/ or other renewable energy sources, like hydro and wind power) be dealt with? We can deal with the shortage of finance in solar by sensitizing senior staff in financial institutions in Africa on the impact and opportunities in financing solar in their catchment areas. Most decision making staff of financial institutions in Africa have very limited or no knowledge on the technology, impact and opportunities available in financing solar off-grid projects. The non-traditional financing sector should also be encouraged to develop schemes to support the solar industry.

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News Economics Low economic growth in Africa’s largest economies threatens to drag down much of the rest of the continent, according to research by Oxford Economics. Africa’s economic recovery is set to gain momentum in 2018 thanks to reforms, stabilising commodity prices and hopefully easing drought conditions, but South Africa and Nigeria’s slowerthan-expected recoveries may hold that back. South Africa’s economy is set to grow just 1.1% in 2018, while Nigeria’s will grow by just 2.5%. However, a study by the African Development Bank Group (AfDB) found that although the fall in commodity prices in 2016 hit the continent’s major economies hard, Africa still recorded an average of 2.2% GDP growth. Much of this was driven by East Africa, which posted the highest growth rate with 5.3%, led by Ethiopia.

Politics In South Africa thousands of delegates and party members will vote on the next leader of the ruling African National Congress (ANC) this month. Given the party’s large majority, this will in effect decide the country’s next leader. Current President Jacob Zuma is under considerable pressure. Angola’s President João Lourenço has warned that he will crackdown on corruption in the oil rich nation, and has vowed to recover money that has been siphoned out of public hands. However, he warned that this will not result in the “persecution” of rich families, such as the family of his predecessor José Eduardo dos Santos. In Zimbabwe, new President Emmerson Mnangagwa has called for an end to the sanctions imposed by the West in response to former leader Robert Mugabe’s regime.

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News Energy December started with the news that Tullow Oil, one of Africaâ&#x20AC;&#x2122;s most successful explorers, has raised $2.5 billion in new loans to help fund its operations across the continent in 2018. The World Bank pledged to end its support for oil and gas extraction worldwide on December 12th as part of its contribution to the global fight against climate change. For both established producers and those hoping to boost nascent extraction, this will come as major disappointment. Kenya in particular has looked to its oil finds in Turkana as a potential source of revenue and economic growth, but will now have to focus on private foreign investment, which will not be without its challenges given the current climate. Experts in the energy industry are convening at the African Climate Policy Centre for a two-day Energy Modelling Platform for Africa, aiming to bring together the energy planning and modelling community in Africa to promote and support widespread development of centres of excellence in pursuit of planning sustainable development goals.

Finance and trade Mukhtar Abbas Naqvi, Indiaâ&#x20AC;&#x2122;s Minister of State for Parliamentary Affairs, estimated that bilateral trade between his country and Africa will exceed the $100 billion mark in next two years due to improved business conditions and better connectivity. In 201516, this figure stood at $57 billion. Nigeria, Kenya, South Africa and twenty other African states have launched phase one of the Single African Air Transport Market, an effort to replicate the European Common Aviation Area in a vital step towards open African skies. Unveiled at the African Union, this agreement is based on the 199 Yamoussoukro Decision and will enhance connectivity between African countries, boosting economic development.

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Great companies have great tales to tell. With an established global reach, our editorial is read by senior executives, buyers, manufactures and other leading industry professionals. If youâ&#x20AC;&#x2122;d like to share your strory and bring your business closer to the people that matter, please contact us today. @EssentialBizMag

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y o u r

w w w.e s s e nt i a l bu s i ne s s m a g.co m

Netafim

w w w . n e t a f i m . c o . z a

Opportunities for growth

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Agriculture

An African subsidiary of an Israeli irrigation company, Netafim have been supporting African farmers and operating across the SADC since 1992, bringing its revolutionary drip-based irrigation technology to some of the world’s most challenging arable land. spoke to managing director Etienne Erasmus about his time with the company and its future.

etafim has been at the cutting edge of irrigation since the invention of the drip irrigation system back in 1965. Its development since then has been continuously and consistently innovative. Etienne Erasmus has been the managing director of Netafim since 2006, but has been working in irrigation since 1981 as a designer, and as President of the South African Irrigation Institute (SABI) since 2004. He describes how the industry has changed: “I saw booms in all the irrigation methods from impact sprinklers to drip and back to impact sprinklers in the early 80s”, he begins. “We saw a boom in static micro jets and then micro mini sprinklers that ruled in our market during the late 80s till the beginning of the 90s.

“Its development since then has been continuously and consistently innovative “But slowly drip irrigation started to get momentum when the concept was understood better and we started to apply nutrients through them. The drip systems acted like a transport medium for macronutrients and micronutrients. They also understood what ‘food’ (nutrients) plants needed at different phenological growth

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N e t a f i m

Cherry Irrigation...

stages and this was applied through the drip systems right to the roots of the plants.” Erasmus also saw the company become part of the SADC, the Southern African trade and development bloc that covers all of southern Africa. The company has moved into Botswana, Zambia, Zimbabwe and Mozambique, and even seen good sales in Angola.

Etienne Erasmus, managing director, Netafim

“Farming could soon be done by app

Growing more with less

Drought has been a perpetual and devastating issue for African farmers across the Sahel and sub-Saharan Africa, the cause of many crises and famines across the region. Founded to wring life from the deserts of the Middle East, Netafim has always been about sustainability. Its core product, the drip irrigation system, is the most efficient system that exists and one specifically built to irrigate as wide an area an possible using as little water as possible. However, over the last few years, Netafi m has stretched beyond this core to also offer smart irrigation solutions. Erasmus explains that his company “tried to fi nd the right solution for specifi c circumstances and then help the farmer to save water and optimize their crop production.”

...is a leading irrigation business specialising in the design and implementation of all types of agricultural irrigation systems. We are an authority on the design and installation of irrigation systems for the open field and greenhouse market. Based in the Western Cape of South Africa, we proudly serve a variety of businesses, both large and small, across Sub-Saharan Africa. We pride ourselves on offering a turnkey solution from consultation, assessment, planning and design through to implementation and aftersales support. Our focus is on quality and all the equipment we install is sourced from reliable, reputable dealers who have an unparalleled standard of excellence. We have a long-standing relationship with NETAFIM and are also a NETAFIMapproved supplier of crop management technology (CMT) products which offer the best possible control systems for your greenhouse. This high quality equipment is complemented by our SABI-approved (South African Irrigation Institute) designers ensuring that only the best possible design solutions are delivered to you. Cherry Irrigation has over 30 years experience in the industry, we’re a SABI company member and we’re a registered ISO9000 company. We pursue strong, longlasting relationships with all our customers and we recognise that these relationships can only be earned by building trust and demonstrating commitment. We believe meticulous sales and aftercare services are key to securing this.

For more information call +27 21 859 4246 or visit www.cherryirrigation.co.za

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CHOOSE US FOR A TURNKEY SOLUTION

We deliver an end-to-end solution covering all aspects from the initial consultation, through to design, implementation and after-sales customer support.

QUALITY THAT GROWS

LEADING THE FIELD in the design and implementation of all types of argicultural irrigation systems

KNOWLEDGE & EXPERIENCE

We have over 30 yearsĘź experience in the irrigation industry and a full complement of specialists who are more than familiar with the intimate details involved at each stage of the process.

IN-HOUSE FROM START TO FINISH

With all the skills required to deliver a project existing in-house, we have no need to enlist sub-contractors. We are fully responsible for all aspects of every project we take on without any middle-men slowing down the process.

QUALITY

irrigation solutions

The equipment we install is of an unparalleled standard of excellence and is only sourced from reliable, reputable dealers. This high quality equipment is coupled with high quality design: All our designers are SABI (South African Irrigation Institute) approved. These two factors combine to ensure that only the best possible design solutions are delivered to you.

SABI company member

ENVIRONMENTAL SUSTAINABILITY

Your one-stop specialist for all

Over 30 years of knowledge & experience

Minimising our impact on the environment is imperative to us. As far as possible all our system designs are created with maximum efficiency in mind and include the harvesting of rainwater and the treating and recycling of run-off water.

CUSTOMER SATISFACTION

From OPEN FIELD to GREENHOUSE IRRIGATION & FERTIGATION solutions You can rely upon us to deliver

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This is one of our core values. We pride ourselves in forging strong, long-lasting relationships with all our customers. We recognise that these relationships can only be earned by building trust and demonstrating commitment. We believe meticulous sales and aftercare services are key to securing this.

We design TAILOR-MADE SOLUTIONS to ensure you get MAXIMUM RETURN ON INVESTMENT

CO M PA NY MEMBER & ISO 9001 CO M PA NY

N e t a f i m

Mouldex (Pty) Ltd... ..was established in January 1992, in a suburb 20 km’s outside of Cape Town named Brackenfell. Brackenfell is situated in close proximity to Cape Town International airport, it is also within a stone’s throw of the famous Wine Routes. Mouldex is an owner managed company. We pride ourselves on the fact we undertake to any new and exciting projects with enthusiasm and zest. The owners are very much

One of Netafim’s key business areas is the sugarcane industry, with huge sugar estates leading its growth in Africa. The company’s website boasts that drip irrigated cane fields registered yields of 50 to 90 tonnes/ha more than others, with 30-45% water conservation and 25-30% reduced fertiliser requirement. In Africa the returns could be even higher. Particularly for lower-income farmers in less developed countries this kind of saving can be a significant advantage, allowing them to invest more in their farms and produce much greater volumes of product. This also applies to other crops and sugarcane is by no means Netafim’s only business. It also sells to cash crop farmers growing bananas, tobacco, blueberries, avocados and nuts, as well as more general staple farmers growing vegetables and grains.

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It is increasingly apparent that droughts and water shortages are a function of climate change, and as such an inevitability only going to increase in intensity as time goes on. Netafim is continuously developing its technology to account for more and more extreme climate change situations and for greater and greater efficiency while retaining the reliability and affordable cost that’s made it so successful.

“Founded to wring life from the deserts of the Middle East, Netafim has always been about sustainability

hands on, in both the Injection Mould Tool manufacture and the injection moulding production. Mouldex produces high quality plastic components for various companies in South Africa. The product ranges from irrigation components, educational toys to pharmaceutical components, etc. Mouldex has an extensive quality program that has to comply with the S.A.B.S standards. Mouldex is also ISO 9001 compliant. Mouldex has a fully equipped tool making tool room, which can produce Injection Mould Tools to the highest standard. We also have our own design facilities with the latest Plastic Moulding design packages that will accommodate any Injection Mould design necessary. For more information contacts us: Tel: +27 (0)21 981 8699

www.mouldex.co.za

Injection Moulding High Quality Plastic Components

www.mouldex.co.za

N e t a f i m

Vegtech At Vegtech, our years of experience and ongoing commitment to innovation combine to create undercover growing solutions that deliver real results for your business. We partner with you every step of the way, from concept to construction, and provide you with expert advice and ongoing support to help your business flourish. In partnership with global irrigation leader Netafim, we offer a high range of the highest quality products and systems to meet all of your growing requirements. What we offer: Turnkey Solutions Greenhouse Structures Irrigation Climate Control Crop Management Technology Growing Products Contact us for more information: Tel: +27 (0)21 987 6980

www.vegtech.co.za

“That means maintaining our integrity, good intent, performance drive, fairness, aligned values, training, knowhow, good planning and execution Erasmus believes that the next step will be more attention to digital farming, helping farmers make better decisions and allocate resources more efficiently. Strange though it may sound, Africa’s cellphone revolution provides the perfect means to grow this new development in farming, providing a convenient way to monitor, influence and control smart irrigation systems. Farming could soon be done by app.

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Sustainable business

Netafim has been in the business a long time, and part of that is thanks to a robust recruitment process designed to recruit the best and brightest personnel. As Erasmus emphasises, hiring well is the key to his company’s success. “We have a very dynamic team, and stability of personnel is part of our success. Business is about people and trust, and sound relationships you build

over time. We have our own internal training programme in SA, and then we have iLearn, a Netafim internet training program which offers over 1000 computer software courses. It covers things like relationship building, public speaking, team building, organising your work spaces, stress management and dozens of other topics both specific to our industry and to build competence as a whole.” Going forward, the company is planning for steady growth and development rather than ambitious leaps, focusing on SADC countries and its international projects team. Erasmus says that going forward Netafim “have to make sure we

Agriculture

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CMY

Turnkey Solutions

Greenhouse Structures

Irrigation

Climate Control

Crop Management Technology

Growing Products

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stay open to change but above all, we have to make sure we keep the basics in place. That means maintaining our integrity, good intent, performance drive, fairness, aligned values, training, knowhow, good planning and execution. And last but not least, to never compromise on quality and constantly encourage innovation and good leadership.” Etienne plans to position his company as a preferred supplier for multiple SADC countries, with a particular focus on Zambia. “We’ve put more people on the ground and in particular appointed an in-house agronomist in Zambia, because it’s the country with the most potential at the moment.

“The Zambian market is the main market for sugar cane, being well established in the Illovo area and Upper Bala. There are more than 1.5 million smallholders in Zambia. Those are the farmers who can pass on their knowledge and experience and turn them into big farmers who are more profitable.”

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Drip-tech w w w . d r i p t e c h . c o . z w

water Carrying

Drip-Tech Irrigation is a family-run Zimbabwean irrigation business serving contractors and end users with irrigation and pumping systems. Founded in Harare in 1995, it now supplies a wide variety of irrigation and pumping systems to agricultural and domestic customers. spoke to the companyâ&#x20AC;&#x2122;s MD, Peter Henson.

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Irrigation

rip-Tech is comprised of a retail and a manufacturing section, with more than 80 employees between them. The company sells to several different sectors of the southern African economy: commercial farmers, small-scale farmers or informal growers, mining and industrial clients and urban homes, many of which do not get their water from municipal suppliers. Henson elaborates. “Our customers split probably into four or five different groups. One of the major groups are commercial farmers, making up about 30% of our sales. Another group that is growing is small scale farmers, sort of informal guys, who have got a hectare or less. They contribute to probably 25%-30% of our sales. Another growing industry for us is what we call “urban water” which is domestic, household water. Probably 70% of our clients here are out of the reach of water provided by the local municipality.” Consumers are turning to companies like Drip-Tech because municipal pumps are often broken, and repairs are slow. Governments have limited resources, and they are often diverted elsewhere. This is forcing individuals into making their own plans for water. Henson gives an example of a client and the solution offered to them.

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D r i p - T e c h

“An alternative to municipal water is borehole water. Once a client has had their borehole sited and drilled, Drip-Tech provides installers and everything that they may need to extract the water from the hole into their client’s homes or businesses. Drip-Tech manufactures its own high-quality borehole casing and stocks various pumps and motors to suit the application. In addition to this we supply any fittings that may be required. A popular trend in Zimbabwe is to extract water from your borehole into a storage tank, which we also supply. Now that a client has available water in their storage tank we provide various water boosting solutions to pressurize the water into their homes or businesses.” Drip-Tech’s large focus on urban water and supply to domestic clients is one of the reasons for its success. Unlike the agricultural and farming sector which is very seasonal, domestic water systems are in demand constantly. This supports the company during its off-peak times from December to May, when the demand from the agricultural sector is low.

“Probably 70% of our clients there don’t get their water from their municipality

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Creating opportunities

One of the major seasonal farming industries Drip-Tech does work with is the tobacco industry. Zimbabwe is a large tobacco grower, and when Drip-Tech was starting up in the mid-1990s many of the farms at the time were small or starting out with limited capital. Henson explains how both the company and its clients have adapted to and benefited from its involvement in the tobacco industry. “When Drip-Tech originally came out in the 90s in Zimbabwe its products were relatively expensive and out of the reach of many smaller scale farmers”, he explains. The country’s standard of 1mm thick drip lines were expensive to manufacture and used a lot of material, so it was hard to economically sell them at prices its customers could afford. Drip-Tech, seeing a prospective market, began investigating affordable alternatives. “By teaming up with key players in the world industry we can now supply a reliable product that is a lot more affordable.

Our fastest moving product is now 0.2mm thick as opposed to the original 1mm product. The 0.2mm won’t last as long as the 1mm, but the capital investment to start a tobacco farm is much lower and it’s much easier to get the ball rolling.” The advantage of irrigation with tobacco growing is that two crops can be grown in the same season. The irrigated crop is normally planted beginning of September, and the rain fed crop normally around the end of the year, a couple weeks before the onset of the rains. Henson elaborates:

Irrigation

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Future of tobacco

Furthermore, Peter doesn’t think that anti-smoking campaigns worldwide will destroy the tobacco industry. “The global demand on tobacco may not have grown, with the world becoming more health conscious, but the fact that the demand for tobacco is coming down means the demand for high quality tobacco is actually going up and the price difference between low quality tobacco and high-quality

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“An advantage of irrigation with tobacco growing is that you can grow two crops in the same growing season. The irrigated crop is normally planted beginning of September and the rain fed crop normally around the end of the year, a couple weeks before the onset of the rains tobacco is getting bigger. At DripTech we recognize that irrigation and irrigation management are key tools in achieving a highquality tobacco crop. Farmers can also receive help with irrigation from the local Tobacco Industry and Marketing Board (TIMB), who subsidizes irrigation systems. Once introduced to dripline, farmers learn that dripline is no

longer an expensive luxury, but is rather a very affordable and indispensable tool in increasing yields. Drip-Tech supports their efforts and is right behind them, as it finds that small-scale farmers who start out with small sized schemes tend to become long-term customers once their businesses grow larger and they buy more extensive irrigation schemes.

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Assa Abloy

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players

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Manufacturing A Finnish/Swedish manufacturer of mechanical and electronic locks, Assa Abloy is global company with a strong presence in East, West and Southern spoke to Africa. Mr Humphrey Kinyua, managing director of Assa Abloy’s Kenyan branch, on counterfeiting, a boom in the construction industry and working in a fast-developing economy.

ssa Abloy are an almost ubiquitous name in door locking solutions worldwide, with the company maintaining maintaining import and distribution subsidiaries across Africa. Mr Kinyua has been with the company for more than a decade and has seen it grow with the Kenyan economy, from selling basic mechanical locks to high-tech and state of the art mobile key, electronic and digital locking solutions. The growth of the construction industry has been essential to the company’s success in Africa, as Kinyua explains: “Demand has been increasing over time, driven by the boom in the construction industry in Kenya and East Africa. We’ve seen very strong growth in the construction industry over the last 10-15 years.”

Supplying growing sectors

As a developing economy, Kenya’s demand for specialist manufacturing and imported goods like Assa Abloy Kenya’s locking solutions is constantly changing. In particular, rapid development in a number of new sectors has shifted Assa Abloy away from supplying basic domestic locking solutions and into a number of new areas with different and more high-tech demands. Kinyua elaborates: “There’s been quite a lot of growth, especially in the aviation

sector, with the increasing of the capacities of the airports and the terminals. We’ve also seen very significant growth in the healthcare sector: newer hospitals and expansion of hospitals all over the country. “The education sector also has seen tremendous growth for the last couple of years with a lot of universities coming up, and there’s demand for security solutions there, as well as security for student hostels. Also, the hospitality industry and the hotel industry have been growing year on year, and they need security there as well.”

“The growth of the construction industry has been essential to the company’s success in Africa

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A s s a

Growth of new technologies

Gradually, this growth is solving one of Assa Abloy Kenya’s problems. Low incomes and a lack of purchasing power in the market mean that low-tech solutions are its biggest sellers, and price is a major consideration. Smaller purchasers aren’t able to afford its more high-tech products, so much of their inventory is quite old – sometimes 30+ year old designs from the 1970s. As Kinyua explains, “these are traditional products. The market is quite conservative in nature, and people tend to keep to what has been tried and tested over time”. However, with more large projects requiring more sophisticated security, and a general increase in the purchasing power of the average Kenyan buyer, Assa

A b l o y

“People are looking for something that can offer them security, safety and convenience, so electromechanical solutions are strong because they offer this combination Abloy’s strongest growth area is the electronic locking space. “That’s where almost everybody seems to be getting into” as Mr Kinyua puts it. Kinyua goes on: “we are looking to see a lot of people moving away from very basic mechanical solutions to buying quite sophisticated electromechanical solutions. People are looking for something that can offer them security, safety and convenience, so electromechanical solutions are strong because they offer this combination valued by customers.”

Low-quality competition

Another problem in a low purchasing power market is competition, from local companies, other, cheaper importers (China in particular) and occasionally from counterfeiters. Cheap imports are a problem for manufacturers in Kenya, offering (in the minds of customers concerned more with price than quality, at least) a cheaper version of the same item. “It’s not just our product, every other good product in the market faces competition from inferior quality imports, not just in the locking systems. Go to the paint industry, they are facing the same, go to the electronic products industry, they are facing the same”, Kinyua explains. With regards to counterfeiting, the Kenyan government has created the Anti Counterfeiting Agency (ACA) to fight this problem, working alongside the Kenyan Bureau of Standards and the new Trade Remedy Agency established by the Kenyan Trade Ministry, seeking to address this problem through raids on counterfeit manufacturers.

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A s s a

Working values

Currently, the company employs nine people across Kenya, and sees good staff retention and a low staff turnover. Mr Kinyua puts this down to a “good working culture. We work like a family – we embrace teamwork, we embrace freedom, people are given a lot of freedom to innovate, and to make decisions. This has contributed a lot to a very high staff retention ratio.” Assa Abloy Kenya is also involved in a number of corporate social responsibility programmes, partnering with a number of Swedish companies to support CSR. They also help with multiple education programmes in the area to teach healthcare and HIV/ AIDS prevention, as well as

sponsoring football tournaments to help fund education. When asked where Assa Abloy Kenya was trying to develop in the next few years, Mr Kinyua’s answer was simple. “We’re trying to position Assa Abloy’s products in the minds of more customers. We want to see it become a household product in terms of security solutions in the next five years. We also want to see our geographical expansion accelerated. We want to see ourselves grow not just in Nairobi but also shining in all the 47 counties. “We also want to be noticed in every space – the electromechanical space as well as the state of the art access control space, the mobile locking, and mobile key solutions spaces too.”

“We work like a family – we embrace teamwork, we embrace freedom, people are given a lot of freedom to innovate, and to make decisions

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A b l o y

Manufacturing

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Paintcor

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coat Founded out of a shed in 1986, Paintcor has become an exemplary medium-sized paint supplier in the South African market, with five retail outlets and a large production facility in Johannesburg. The companyâ&#x20AC;&#x2122;s founder and CEO Greg Williams spoke to about operating a niche, self-made and growing business.

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Manufacturing

aintcor produces paints and products for a wide variety of applications including highquality domestic paints, commercial-grade coatings, floor coatings, cement enhancers, sealers, cleaning agents and biocides. All of the company’s products are designed with high quality and performance in mind rather than cost, positioning it at the premium end of the market. Mr Williams runs a tight ship, with forty-five staff members employed at his company’s central production site in a suburb of Johannesburg and a three further retail stores at his company’s newly established Colourways branches.

Colourways is the most recent expansion of the business, aiming to bring high-quality Paintcor projects to a wider base of discerning clients and consumers and to ease distribution and accessibility of the company’s products.

“All of the company’s products are designed with high quality and performance in mind rather than cost, positioning it at the premium end of the market

Regime change

One of the strengths which has developed out of the shift to manufacturing/retail as opposed to pure manufacturing is the training regime, which ensures all employees stay up-to-date and gain skills while working for the company. “Depending on the staff, we have developed a system where anyone coming in has to write a comprehension test, and their marks let us decide what level they’re at. We find that people are coming in with certificates that aren’t worth the paper they’re written on, but working for us they can be trained by us and train themselves to develop skills.” Paintcor is seeing a number of other changes – and challenges

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P a i n t c o r

– to its business and operating models. Over the past few years it has seen significant market decline of between 15% and 20%, driven partly by a slowdown in the construction industry but more importantly by the fact that, in Williams’ words, “a lot of the slightly lower income people can no longer afford to paint, because the cost of raw materials has gone up so drastically. The markets are under heavy pressure.”

Changing directions

New legislation, while necessary from an environmental and safety point of view, has also been another factor slowing down business, with white pigments facing a potential threat of being classified as a carcinogen in its powder form. For some products, like those using white titanium pigment, there is not yet a legal alternative to replace them, should titanium dioxide be reclassified, an avenue of sale would be lost and the paint industry would experience a major backlash.

“We at this stage have got the plans ready for the first section of our new factory, but we have problems with power on our land. The land is a fully industrial site, but the local council cannot supply us enough electricity at this stage to run the whole factory.

Responding to these issues, however, Mr Williams and Paintcor have fallen back on tried and tested methods. “We are responding by going out, working harder, calling on more opposition customers, and we’ve managed to take a few customers from the opposition. Right now that is the only way we can grow: to be efficient enough to take customers from the opposition.”

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Despite the squeezed climate, Paintcor is still growing and expanding, shifting in new directions to diversify away from its current predicament. A larger automated production plant is currently under development, with plans prepared, although another somewhat South African problem has held back the original vision of the project and forced the company to adapt. Williams explains:

Greg Williams, founder and CEO, Paintcor

“We are responding by going out, working harder, calling on more opposition customers, and we’ve managed to take a few customers from the opposition

“To resolve that, we’re building half of the new factory on that land, this will be sales and stores, and our current facility will be turned entirely into production. That will double our capacity, and we will send that product onto our new land, which is maybe 500m up the road.” Paintcor is also moving away from traditional sectors into more highvalue specialist sectors, markets and products. Normal derivative coatings is such a competitive market (Mr Williams mentions that imported products, particularly from Egypt, the Middle East and the BRICs like Russia, are outcompeting South African goods thanks to lower import duties).

Protea Chemicals is all around you – from the coating of paint on the wall to the brush that painted it, and from the glue in your child’s school project to the solvent you used to clean your hands after helping to build it. Inside every coating, adhesive and sealant is Protea Chemicals.

Industry Sector: COATINGS, ADHESIVES, AND SEALANTS

P a i n t c o r

Getting up to date

One specialist area Paintcor has recently moved into is the private aviation market, creating coatings and paints to treat the fabric skins of vintage and wood-framed aircraft. Its new waterborne fabric aluminium coating product is designed to provide long-lasting protection to older aircraft like Gypsy Moths, stretching with the fabric and protecting it. It’s currently under testing, with polyurethane topcoats for a similar application under development. In addition, the company is also getting its branding up to date and training new sales staff to begin plans to expand into the rest of Africa, where economies are moving faster and demand is higher. Botswana, Malawi

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and Zambia are their current targets, (“right now we’re staying away from Zimbabwe, we don’t know what’s going to happen there”, comments Williams), with Botswana in particular mentioned as an attractive prospect. “Botswana is a fantastic well-run, stable, secure country with just about no crime. The only crime they have there is petty theft. In Botswana the rhinos and other wild life are protected by the Botswana military and poachers are dealt with severely, so hey don’t have a problem with wildlife poaching in Botswana. A well-run, growing entity with a certain kind of hard-working approach – it sounds like

Botswana and Paintcor could be a perfect fit.

“The company is also getting its branding up to date and training new sales staff to begin plans to expand into the rest of Africa, where economies are moving faster and demand is higher

Manufacturing

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Sumitomo w w w . s r i g r o u p . c o . z a

I n t e r n a t i o n

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Manufacturing

a l

I n v e s t m e n t The Japanese Sumitomo Rubber Industries, Ltd (SRI) group is one of many multinational corporations bringing its products to Africa. As the African arm of the fifth-largest tyre manufacturing company in the world, Sumitomo Rubber South Africa demonstrates some important lessons for local and international companies operating within the continentâ&#x20AC;&#x2122;s varied markets.

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S u m i t o m o

irst established as an overseas division of the British Dunlop company, the company that would become Sumitomo Rubber eventually expanded overseas in its own right, coming to operate multiple plants internationally, including several in Africa. The company has sales offices in sixteen countries worldwide and its overarching group comprises more than seventy companies dealing in tyres, sporting goods and industrial products. The corporation came to Africa in 2013 after its acquisition of Apollo Tyres South Africa, subsequently renamed Sumitomo Rubber South Africa (PTY) LTD.

Investment and expansion

The company’s primary business is the manufacture, distribution and sale of high-quality and SUV tyres as well as passenger car tyres, manufactured at its plant in Ladysmith, KwaZulu-Natal. The plant was purchased by SRI as part of its $60 million deal with Apollo Tyres in May 2013, also granting Sumitomo control of the Dunlop brand for worldwide use. In 2016 they began a largescale two step upgrade and expansion investment programme, investing R2 billion in upgrades and expansions to the Ladysmith plant as part of phase two. Phase one, a

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R u b b e r

period of modernisation in 2014 that cost R1.1bn, is already creating new job opportunities in the area, with a total of one hundred and twenty new skilled jobs created and many already filled. Phase two will create a further three hundred jobs in the area, increasing the plant’s total workforce to more than twelve hundred, and introduce the manufacture of heaviergrade bus and truck tires for commercial customers. It’s planned to cost just R910 million and will replace the current import-based supply chain that brings in commercial tyres from SRI’s plants in Japan and China. This development is part of the Automotive Investment Scheme run by South Africa’s Department of Trade and Industry, combined with a Tariff-free Trade Agreement (T-FTA) intended to enhance South African foreign trade. It’s been hailed as a great example of South African businesses and government agencies working together. SRI’s Chief Executive Off icer Riaz Haffejee welcomed the deal, stating “we will continue to support government with innovative solutions and constructive engagement to overcome regulatory challenges and impediments crucial to our industry and the pursuit of employment generating, high growth and competitive industrial and manufacturing initiatives.”

I n d u s t r i e s

L t d

“Its social investment programs revolve around entrepreneurship development, education, skills development and health

Social responsibility

Sumitomo Rubber South Africa (PTY) Ltd runs multiple corporate social investment programmes, based around an understanding of the deep impact its actions can have on the society in which it operates. Its social investment programs revolve around entrepreneurship development, education, skills development and health. The company’s Tires For Good donation program is its most straightforward CSR scheme. It involves donating tyres to nonprofit organisations, charities and charitable initiatives, worthy NGOs and public beneficiary organisations, helping them to stay mobile and reducing their operating costs.

Tyre distributor specializing in Africa distribution

CONTACT

Jonathan Smith - Africa Sales Manager +971 56 431 1390 j.smith@nabtires.com

S u m i t o m o

R u b b e r

I n d u s t r i e s

L t d

“As a result, Mr Haffejee said his company’s purchase by the multinational in 2016 was positively received and unlocked new opportunities Tyres Can Do More is more environmentally focused, recycling and reusing old tyres and waste materials while also helping with skills and enterprise development in peri-urban Ladysmith. Waste material from the plant is gathered from the SRSA factory and given to Eyethu Craft, a local community group assisted by the non-profit skills agency Africa! Ignite, who turn them into gift items and domestic goods for effective waste upcycling. Sumitomo South Africa also operates a vegetable garden at the SRSA factory, tended by staff. Vegetables grown in the garden are donated to local schools and daycares. While these are all top-down initiatives, there’s also a strong culture of staff volunteerism, with staff encouraged to provide time and resources towards good causes in the community and beyond.

Working in South Africa

Sumitomo Rubber South Africa sells primarily in South Africa, although it is looking to boost its international export presence. Like most other South African

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firms, the company’s investors and leadership have been wary of the country’s political issues and the lack of stability they can cause. CEO Mr. Riaz Haffejee laid out the decision-making process for investment in an interview with Business Day Online: “Politics we can’t influence. We would like it to be a lot better, certainly more stable and a lot more predictable, but I don’t think politics will be that way, certainly not now and for the foreseeable future, but having said that there’s still a market out there which requires our investment for us to make the most of it.” Other elements of South Africa’s struggles have been more positive for Sumitomo Rubber South Africa in particular. Because it’s actually producing tires in South Africa itself, the company has benefited from some areas in which the rest of the economy has suffered. Haffejee expands: “one of the things that’s been on our side from the manufacturing point of view certainly is that the Rand has devalued significantly, and

that’s provided us with a little bit of breathing space in terms of having more demand for locallymanufactured tires because of a drop in import demand.”

World leaders

80% of the factory’s output is Dunlop branded, and the Sumitomo corporation are the world leaders in selling Dunlop products. As a result, Mr Haffejee said his company’s purchase by the multinational in 2016 was positively received and unlocked new opportunities: “for us it was like coming home, and we now had access to a lot of deep technical advice, knowhow, manufacturing know-how, sales know-how, and although we had done a pretty good job in South Africa and in some of the export markets we worked in, we felt that was quite a big feather in our cap to have them on our side. “When they saw our potential in our markets, particular with original equipment, with Africa, and also with some product sectors that we had not competed in before, they understood than an investment was worthwhile.”

S h a r e

y o u r

Essential Business Publishing Ltd

@EssentialBusinessAfrica

Essential Business Magazine

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Malawi Airlines w w w . m a l a w i a n - a i r l i n e s . c o m

Above the

Malawiâ&#x20AC;&#x2122;s flag carrier, Malawi Airlines Limited has been flying for just three and a half years, but is holding its own in a difficult market. spoke to Adamu Tadele, Malawi Airlinesâ&#x20AC;&#x2122; Acting CEO, on how his company is overcoming various obstacles.

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Aviation

alawi Airlines is one of Africa’s more successful regional airlines, one that’s beginning to grow out of its home country and spread its wings across the rest of Africa. The company operates B737-700s and Bombardier Q400 propeller aircraft between Johannesburg, Lusaka, Harare, Dar es Salaam, Zanzibar and Nairobi, flying out of its base in Lilongwe and to Blantyre. Adamu Tadele has been Malawi Airlines’ Director

of Finance and Strategic Planning for 12 months now and Acting CEO since September 2017, following 22 years in Finance and Treasury at Ethiopian Airlines, the continent’s leading state-owned carrier. It’s a difficult time to be an African domestic commercial aviation company. The industry has been struggling to break even for years across Africa, hampered by difficult and complex regulations, high fuel prices, financial restraints, inter-state disagreements and a lack of passengers. Many

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M a l a w i

A i r l i n e s

CMY

domestic and regional airlines that were blossoming prior to the 2008 financial crisis have subsequently collapsed or found themselves out of business thanks to these issues. Air Malawi, which went into liquidation in 2012, was no exception. The modern Malawi Airlines was established as a result of the fall of Air Malawi in 2012, and is

operated by Ethiopian Airlines under a management contract and a 49% ownership stake. It has enjoyed more success than its predecessor, but it’s still been held back by the after-effects of the oil and commodity price crashes that have left it short of passengers as much as anything else. After all, as Mr Tadele notes, “on the demand side, flights are not like food and shelter.

“The fact is that more than 80% percent of the continent’s traffic is carried by non-African airlines, so that means there is a lot of room for growth

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During an economic slowdown people can cancel their flights or postpone them. It’s a challenge.” Malawi Airlines operated at a loss in 2013 and 2014, but had more comfortable and reliable returns in 2015 and 2016 thanks to the lower price of jet fuel, although the unsteady economy and limited numbers of Malawians able or willing to travel by air continued to provide obstacles. While jet fuel prices were slightly lower, the comparatively high local prices of fuel in Malawi meant that the airline often opted to buy from South Africa, creating a significant and expensive logistical challenge.

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M a l a w i

Closed skies

Another challenge is the lack of bilateral air traffic rights and open skies agreements between African states, a problem for domestic carriers attempting to fly internationally within the continent.

“Malawi has a young, growing population, so really it will be a good target for FDI More than a few routes across Africa involve long detours via European airports, an opportunity for foreign carriers from Europe and the Middle East that already have links to those sectors. Said foreign carriers are out-competing African flag carriers and domestic airlines on their own turf, partly thanks to European aviation safety laws that ban African carriers from flying to European destinations (while of course not banning European carriers going in the other direction). However, this does present an opportunity, as Mr Tadele points out, “the fact is that more than 80% percent of the continent’s traffic is carried by non-African airlines, so that means there is a lot of room for growth.”

Ground effect

One ongoing benefit of Malawi Airlines’ existence is that it helps drive healthy competition between the airlines flying into and across Malawi. A Malawianowned budget competitor airline,

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A i r l i n e s

Aviation

Lakestar Express Limited, has been issued its own air service license and will begin flights in January 2018, flying two smaller 19-passenger Beechcraft 1900D aircrafts between Lilongwe and Blantyre, and to the northern regions, with plans to go regional around April 2018. This may help Malawi Airlines bring down fares, which remain high despite recent cuts in fuel costs. Opposition parliamentarian Juliana Lunguzi has argued that the airline is “not benefitting Malawi” because of these high costs, although Malawi Airlines has other benefits for the nation beyond domestic passenger travel. Stable, reliable aviation brings in foreigners, both tourists and more importantly business passengers. Tourism revenue is nice, but foreign direct investment (FDI) is even more so, and Malawi Airlines is focusing on bringing it in. “We’re working on attracting FDI in cooperation with the government of Malawi. Improving pointto-point traffic is a part of this focus. Malawi has a young, growing population, so really it will be a good target for FDI.” Despite the trying circumstances it operates under, Malawi Airlines is still growing and offering Malawi’s growing middle class transport links to destinations across Africa. The company is also making strides in other areas as well, with all-female crews and efforts to encourage women to join the stereotypically male-dominated industry. As Mr Tadele points out: “it’s important to encourage young girls so that they can be technicians and pilots, which is why that flight was such good news. As an airline, we want to tell them and make them aware that this industry is open to them.”

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KPA

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g r o w t h Navigating Navi

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Logistics

Kenya Ports Authority (KPA) is the state-owned company that handles the Port of Mombasa, the largest in East Africa, as well as numerous other ports and facilities up and down the Kenyan coast. Handling more than 13 million tonnes of throughput every year, KPA has the difficult task of balancing dozens of stakeholders, requirements, responsibilities and issues that come up in the running of a major seaport.

last covered the Kenya Ports Authority two years ago in January 2016, at a time of significant planned growth and expansion. Mombasa, the countryâ&#x20AC;&#x2122;s main responsibility, was seeing 11% increases in traffic every year, with its berth occupancy at an average of 80% and hungry inland economies eager to use it to access international trade. The Mombasa Port Development Project (MPDA), KPAâ&#x20AC;&#x2122;s effort to achieve World Class Seaports of Choice status, was underway, with a second container terminal 92% away from firstphase completion and huge

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K e n y a

P o r t s

A u t h o r i t y

Tata Chemicals Magadi Tata Chemicals Magadi (TCML) occupies a significant place in the African economy. It is Africa’s largest Soda Ash manufacturer and leading exporters.

dredging and development operations underway to attempt to resolve Mombasa’s natural shortcomings as a cargo port. Moreover, down the coast, the sleepy tourist village of Lamu was a strong contender for the site of Kenya’s second internationally recognised port, and development was beginning on the massive undertaking of building it into a regional competitor.

“Two years on, KPA’s efforts to develop Kenya’s coastal transport links are continuing

Infrastructural challenges

Two years on, KPA’s efforts to develop Kenya’s coastal transport links are continuing. 2018 has already seen the first freight train on the MombasaNairobi railway, connecting Nigeria to the port and opening up a whole new trade route. The new KPA-run Inland Container Depot (ICD) in Embakasi has been launched and opened by President Uhuru Kenyatta, although it’s under-capacity – Kenya Railways has been forced to repeatedly cut cargo charges (the second round of cuts lasting until April 4th) in an effort to draw more users. Concerns about cooperation between Kenya Ports Authority, Kenya Revenue Authority and Kenya railways have been raised by various companies including the Kenya International Freight and Warehousing Association (KIFWA), along with concerns about clearance of cargo at the Nairobi end of the line.

Established in 1911, TCML has been producing Soda Ash at Lake Magadi for more than 100 years. The company recovers trona which is a naturally occurring mineral; from the base of the Rift Valley at Lake Magadi, Kenya. TCML converts the trona into Soda Ash through an elaborate manufacturing process of dredging, calcination, grinding and screening. The product is then transported by rail to the Port of Mombasa for onward shipping on to our export markets. TCML Soda Ash is an essential constituent in the manufacture of container glass, detergents and other industrial chemicals. Over 95 per cent of the company’s product is exported to its principal markets of South East Asia, the Indian sub-continent, Africa and the Middle East. Lake Magadi deposit also provides the raw material to the manufacture salt. Our heritage spans more than 100 years of producing the best natural salt, produced at source. Magadi Salts have a wide range of applications in industrial and animal feeds

Eng. Jackson Muchira Managing Director Tata Chemicals Magadi Contact us at: Email: infomagadi@tatachemicals.com Facebook: TataChemicalsMagadi; Twitter: TataChemicalsKe

www.tatachemicals.com/magadi

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Widening reach

KPA has also been dealing with crime and fraud, with warnings issued against fraudulent contracts and material supply tenders in the country and forgeries of Ministry of Transport and Infrastructure contracts. KPA has insisted that it is not liable for losses from this kind of fraud, and its spokesmen further stressed that it does not engage proxies to conduct procurement on its behalf. Meanwhile in Mombasa itself, the National Lands Commission has identified land illegally claimed from KPA, something the Ports Authority and the Kenya Maritime Authority have complained about for some time. Some illegally claimed land even interferes with navigational signals, potentially threatening vessels in Mombasa’s already crowded waters.

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“The expansion of the port of Mombasa has continued apace, with a $430 million (Sh35 billion) loan from the government of Japan signed to help complete phase two of the planned s econd container terminal

Smaller Kenyan ports are now coming under KPA’s authority, including Lamu and the smaller port of Kisumu on Lake Victoria in March of 2017. Kisumu was once owned by the Kenya Railways Corporation, handling vast quantities of cargo, but it has been underutilised and has numerous ships and ferries effectively abandoned at its docks through unrepaired mechanical failure or lack of business. One notable vessel, the MV Uhuru, was grounded between 2006 and 2016 after technical difficulties and lack of business made it uneconomical to run, cutting off the KisumuMwanza-Port Bell route between Kenya and Uganda. Repairs and more efficient cargo handling techniques will allow the Uhuru to carry economical loads of cargo once again, and Kisumu is due to be connected to Nairobi via a standard-gauge line as well as a pier refurbishment, as well as a planned Sh14 billion port facility. The expansion of the port of Mombasa has continued apace, with a $430 million (Sh35 billion) loan from the government of Japan signed to help complete phase two of the planned second container terminal at the Port, with construction commencing in January 2018. Phase one was completed back in September of 2016 at a cost of Sh28 billion, raising the port’s cargo handling capacity by 550,000 Twenty-Foot Equivalent

Logistics

the added convenience. The Lokichar-Lamu pipeline, which has seen heavy investment from the oil major Total, is also going ahead, committing the South Sudanese oil industry to exporting through Kenya after a previous about-face. Units, standard shipping container size. The second phase will add another 450,000 TEUs of capacity. These upgrades are vital – the various nations inland of Kenya are currently driving a bidding war between multiple coastal nations to provide the preferred route to the Indian Ocean, particularly Dar Es Salaam in Tanzania and Djibouti. Mombasa is naturally limited by its geography, making it important to use the space that is available as efficiently as possible.

Corridors of power

Another major area of interest for KPA is the aforementioned Lamu port, one end of the planned Lamu Port, South Sudan, Ethiopia Transport (LAPSSET) Corridor. The Corridor, which is planned to carry goods, people and oil between Ethiopia/South Sudan and Lamu and Mombasa, is still a while away, but some elements like the Isiolo-Moyale Road and the Isiolo International Airport have been completed, and shipping costs are already beginning to drop thanks to

“The Isiolo-Moyale Road and the Isiolo International Airport have been completed, and shipping costs are already beginning to drop thanks to the added convenience

Finally, Mombasa is also seeing more and more commercial cruise traffic after many years of decline. While one vessel cancelled a call in 2017 following political unrest around the election, more than 2,800 tourists arrived at Mombasa’s cruise port over the past four months, a small but growing number. A $3.4 million terminal at Mombasa financed under public-private partnerships with the Kenyan government is under construction and behind schedule as of January 2018, which could cause problems with its goal of bringing in 140,000 tourists per year when completed. Catherine Mturi-Wairi, KPA’s managing director, has said that the terminal will be completed in mid-2018, and as pirate activity in the Gulf of Aden continues to decline and the Indian Ocean becomes safer, cruise traffic into Kenya is likely to rise.

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HPE Building

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Opportunities High Power Equipment (HPE) Africa is the sole distributor of earthmoving equipment for the Korean manufacturing giant Hyundai in Southern Africa. As such it is a key link in the logistics chain of many Southern African mining, construction and engineering projects. spoke to managing director Alex Ackron to find out more.

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Supply Chain

PE Africa was founded in 2000 as a subsidiary of Invicta Holdings, and remains a proud partner of Hyundai in Africa. The company is a dynamic market player, able to solve a variety of customer problems and provide full support in terms of parts, logistics and maintenance. Its head office is in Jet Park in Gauteng, with branches in Durban, East London and the Western Cape, and the company supplies businesses across South Africa and beyond. The company has maintained its position through a number of carefully maintained selling points, notably the extreme reliability and durability of many of the machines they sell. Hyundai equipment like the HL780-9S wheel loader is built to high standards and designed to last.

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U & L Engineering... ...is situated in Putfontein, Benoni, Gauteng, South Africa.

Tough reputation

The company was formed in 2006 by Ulrich Olivier and in 2007 he employed his first two staff members.

One machine of this type in use by Vanalls Plant Hire at a Witbank smelting plant has already clocked more than 6,000 hours breaking up and transporting silica manganese, with no major maintenance issues and a long expected service life ahead of it, despite heat, rough terrain and the corrosive nature of the material itâ&#x20AC;&#x2122;s being tasked to break up.

â&#x20AC;&#x153;The company is a dynamic market player, able to solve a variety of customer problems and provide full support in terms of parts, logistics and maintenance

Other selling points of the company include the wide range of quality spare parts, easily accessible support, maintenance and repair services, its adaptable finance options, as well as inclusion as standard of higher-tech components like the Hi-Mate telematics system on all loaders and excavators.

HPE Africa also offers engineering services, modifying, repairing and even manufacturing buckets and applying dipper extensions, line-boring and other engineering tasks as support for every machine sold. It also operates a thriving sale and resale business, selling certified used equipment.

Currently we are in the Engineering Business for 11 years and Our focus is still to Provide the best service to our Clients with the best possible Quality. Besides running a machine shop that caters for most of its needs the company is very active in onsite Machining and Welding, carries a stock of components, bar and tube and has an all important modern test bench to certify the hydraulic cylinders it has repaired, refurbished, rebuilt or manufactured. We are not just another Engineering Shop, we offer repairs and manufacture of Hydraulic Cylinders, Buckets, H-frames, A-frames, Dippers/booms, Track tensioners, Pins and Bushes, We also offer On Site Line boring, On Site welding repairs, General Engineering and General Fabrication. Our Workshops consist of 4500 m2 under Roof. We carry Service Exchange Hydraulic Cylinders for â&#x20AC;&#x201C; Hitachi, Bell Equipment, Komatsu, Volvo, Liebherr, Sumitomo, CAT, Terex, Hyundai, Kawasaki We also have service vans that are permanently on the road servicing Clients, both localy and cross the border. The company employees include: 5 Office Team Members, 2 Workshop Managers, 3 Workshop Fore mans, 11 Turners, 4 Welders/ Boilermakers, 2 Milling Machine Operators, 5 Fitters, 2 Cylinder Inspectors, 1 Honing Machinist, 2 CNC Operators, 2 Line boring Operators, 3 On Site Line boring Operators, 8 Hydraulic Fitters, 1 Storeman,1 Receiving & Despatch, 2 Painters, 5 Drivers, 5 Cleaners. For further details contact U & L Engineering on 011 968 9815 or +27 84 250 2248.

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Pockets of opportunity

“Other selling points of the company include the wide range of quality spare parts, easily accessible support, maintenance and repair services, its adaptable finance options, as well as inclusion as standard of higher-tech components like the Hi-Mate telematics system on all loaders and excavators

However, the most important asset to the company is its people. In the words of Ackron, “I believe that the success of our company lies in our agility and our appetite to take calculated risks, as well as our dedicated team delivering superior service and our quality products”.

It’s no secret that the mining and construction businesses in South Africa are both somewhat vulnerable to the whims of a difficult and fractious economy. HPE Africa has seen more than a few challenging times in recent years, but Ackron remains upbeat. “The economic conditions in South Africa have posed some challenges within the sectors that we serve. Some mines have closed down completely and a lot of construction projects have been put on hold due to the uncertainty caused by the economic and political instability. The drought has also affected the agricultural sector negatively. Our industry is under a lot of pressure, but there are definitely pockets of opportunity that exist.” 100% of HPE Africa’s share capital was recently purchased by the investment and management company Invicta Holdings, itself a subsidiary of the Capital Equipment Group of Humulani investments. The acquisition will (in the words of the CEG’s CEO Tony Sinclair) “enable Invicta

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Supply Chain

to broaden its product offering to the plant hire, construction, quarrying and mining industries in South Africa and into Africa. “The transaction has been approved by the Competition Commission. HPE Africa, the Hyundai earthmoving and construction equipment and spare parts agency for South Africa and surrounding countries, will form part of Invicta’s CEG and will continue to trade as HPE Africa, operating as a separate entity from Invicta’s other related equipment operations.”

Pursuing partnerships

For HPE Africa, this deal grants security in the uncertain South African mining and construction sectors, and the freedom to continue operating as a vital part of South Africa’s supply chain. The company is also pursuing other partnerships, including a closer relationship with South Africa’s Primum Engineering, an engineering company that provides solutions to clients across the construction, agriculture, minerals handling and mining industries. If successful, this partnership will help Primum Engineering and HPE Africa deliver a much wider range of services to their clients and allow them to expand their customer base into new and more specialised sectors. They will also be adding McCloskey brand screens and crushers to their product range in 2018,

alongside Hyundai, Soosan and other manufacturers. Expansion is also planned in the energy and power sector, both in the construction wing and in terms of selling complete packaged power plant solutions. This is one of the key pockets of opportunity identified by the company, which sees the continued struggles of Eskom and the South African government as well as the rapidly increasing

energy demand across Southern Africa as an indication that the region is going to see a lot of power plant construction in the near future.

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Nelson Mandela Bay Municipality

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Nelson Mandela Bay Municipality on the Eastern Cape is one of the eight Category A Metropolitan municipalities, the most densely populated and urbanised areas of South Africa. Its local government faces many problems including endemic water shortages, urban decay and civil unrest, but nonetheless the region remains a tourism and industrial hub and important contributor to the South African economy.

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Municipality

Nelson Mandela Bay

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N e l s o n

he Nelson Mandela Bay metro area has been focusing heavily on job creation, with more than R10 million spent on wages, training and new equipment, creating more than 3,500 new job opportunities in the 2016/2017 fiscal year alone, with a further planned total of 8,000 between 2016 and 2018. Discussing the job creation, deputy mayor Athol Trollip described this job creation as a victory in the face of more than a little adversity: “Despite a sluggish economy and slashed Expanded Public Works Programme (EPWP) grant funding, this coalition

M a n d e l a

“Even though the previous administration’s poor performance resulted in grant funding cuts for this coalition government, we still continue to make progress

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government has already doubled the number of EPWP jobs created by our predecessors. Even though the previous administration’s poor performance resulted in grant funding cuts for this coalition government, we still continue to make progress. This government is serious about ensuring that every cent of grant funding allocated for job creation is spent. Thus, for the first time the Municipality has employed the services of a Director in the EPWP unit.” Although these opportunities were set for a fixed period of time, Mr Trollip points out that they have benefits beyond simple employment. While these opportunities are for fixed periods of time, the money earned during this time might make all the difference. “Upon taking office, we ensured that EPWP was formally placed in the Economic Development, Tourism and Agriculture Directorate, under the stewardship of Mayoral Committee Member, Cllr Andrew Whitfield,” he adds. “From the outset, the main identified issue was the substandard performance of directorates against EPWP targets. As such, workshops were arranged between the Department of Public Works, the Metro EDTA unit and various Metro Directorates.”

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Aberdare_01.pdf 1 22/11/2017 10:23:41

CMY

Medium Voltage Power cables you can trust Aberdare Cables, a leading cable manufacturer since 1946, brings you medium voltage electric cable of the highest standard in quality, safety and reliability. Paper insulated lead covered (PILC) cables and cross-linked polyethylene (XLPE) cables are used in many electrical distribution and reticulation applications including: • Municipal distribution • Mining (special construction with water blocking as well as flame retardency for shaft installations available) • Petrochemical industry • Wind farms • Power utilities 181A Barbara Road, Elandsfontein, Gauteng TEL: +27 (0)11 396 8000

PO. Box 1679, Edenvale, Gauteng 1610, South Africa

FAX: +27 (0)11 396 8010

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30839 ABERDARE FP AD.indd

2017/10/16

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Escotek... ..was established in 2003, and in line with the NERSA (National Energy Regulator of South Africa) principles, we aim to vastly reduce the pollution generated from poor load factor power generating stations by effecting the implementation and operation of electricity Demand Side Management (DSM) systems and Energy Efficiency (EE) systems throughout South Africa.

New boreholes

Water supply has been a perpetual issue across South Africa and the Eastern Cape in particular, and Nelson Mandela Bay Metro has had its own difficulties ensuring proper water supply, with limits in place on private water usage and the city currently using an average of 270 megalitres of water per day. Low rainfall is the principle cause of this issue, but inefficient water usage across the municipality has exacerbated the problem. To tackle this, the Metro region has issued R5 million in orders for the drilling of 16 boreholes, some near reservoir sites, others in residential areas. Every household in the municipality currently has access to at least one water source within a 200m radius, and 91% have access to basic sanitation, both above the South African average. More advanced solutions will be necessary in the future, however, as water supplies in the region become increasingly risky.

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â&#x20AC;&#x153;Every household in the municipality currently has access to at least one water source within a 200m radius Energy supplies

Nelson Mandela Bay Municipality is ahead of the curve in some notable areas, most notably in energy efficiency and small-scale embedded energy generation. Since 2008 the towns of Uitenhage and Despatch have been connecting small-scale wind and solar pilot sites to the grid and adding simple net metering systems, while the National Energy Regulator of South Africa developed its guidelines for Standard Conditions for Small Scale Embedded Generation (SSEG, for <100kw projects) in the region and continues to apply them to this day.

At Escotek we understand that electricity is crucial to all aspects of our modern lives â&#x20AC;&#x201C; influencing our quality of life both at home and at work. Electricity is the driver behind our devices, the fuel that powers our businesses and the driving force that elevates our communities to greater heights. The future of electricity will ultimately determine our future, and we believe that because we all need and use the electrical grid, we all have a responsibility to help keep it working effectively and sustainably. For more information contact us: Tel: +27 (0)41 365 1070

www.escotek.co.za

SSEG projects were pushed forwards despite their initial lack of financial profitability as a long-term measure designed to facilitate a consistent power supply over the coming years, and lay a foundation for low-carbon urban growth, easy uptake of embedded generation and socio-economic development. The plan was to diversify local energy supplies and work alongside citizens, helping to combat the problems of load shedding caused by South Africaâ&#x20AC;&#x2122;s endemic power shortages as well as the growing problem of greenhouse gas emissions. Pilot schemes for small-scale wind and solar embedded power plants began as far back as 2005. Now, a simple four-step process

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Municipality

Escotek Demand And Metering Control Systems:

- Active Maximum Demand Control - Automatic Energy Metering Systems - Automatic Water Metering Systems - Communications Via Lte Or Gprs

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All queries with regards to this project can be directed to Escotek Head Office.

Escotek Holdings (PTY) Ltd Tel: +27 41Â 365 1070 E-mail: alwyn@escotek.co.za Website: www.escotek.co.za is available for new small-scale generator builders and operators to add themselves to the local grid, and the first system (a 3.8kw solar PV ground mount system) was installed and officially connected in 2013. Net metering systems allow a tariff to be charged for import and export of energy into the NMBM grid, currently set at 1:1 import:export (uniquely among the municipalities of the Eastern Cape and South Africa as a whole, which offer reduced returns on the tariffs charged for electricity exported back into the grid). To date, 27 systems have been connected to the NMBM grid, with all but two of them generating below 100KW of capacity (the other two generate between 100KW and 5MW, licensed by NERSA).

The eventual goal of all this is to establish the NMBM as a renewable energy manufacturing hub, improving the relationship between energy consumers and the municipality and attracting manufacturers, developers and innovators through an easy-to-navigate regulatory environment. All these things will have a trickledown effect, allowing the municipality to realise its aims in terms of long-term infrastructure development.

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Eskom

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Utilities

Water u

Behind schedule, over-budget and dogged by delays and damages, Eskom’s controversial Ingula hydroelectric pumped storage power station finally came online in January of 2017. The station provides 1,332MW, a solid contribution of South Africa’s endemic power shortages. But how much will it help towards solving the country’s power needs?

ngula Pumped Storage is a hydroelectric power plant straddling the borders of the KwaZuluNatal and Free State provinces in South Africa, in the Little Drakensberg mountain range near Van Reenen. It consists of two dams, 4.6km apart, connected to a power station by tunnels. The Upper Bedford dam, which is around 460m above the rest of the plant, supports a reservoir of around 22,400,000m3 of water storage capacity, of which around 19,200,000m3 is usable for power generation. When the station is switched on, water flows from the Upper Bedford dam through a 1.2km long headrace tunnel to a power house, which holds four 333MW

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VOITH Bold steps to energise South Africa with hydropower

Easing the strain

Situated in the hills of KwaZulu-

Pump-loading projects like Ingula serve a very specific purpose in the national power grid: meeting peak demand and supply during times of high strain. It doesn’t actually generate a great deal of net power. Once the water has run down to the lower reservoir, it must then be pumped back up to the upper reservoir ready for the next use.

Natal in eastern South Africa, the

Thanks to economies of scale, this can be done in the early hours of the morning when conventional nuclear and coal-fired power plants are producing energy and demand is low, but ultimately this means that the project serves as less of a means of generating power than it does of storing it on a massive scale for use during peak time.

turbines, motor generators, the main

pumped storage plant at Ingula is the largest of its kind in Africa. Its four underground pump turbines have a total installed capacity of 1,368MW. Following the tender process launched by South African state energy company Eskom in 2007, Voith was awarded the contract for the provision of the pump inlet valves and other key systems, some 30 years after the government first started planning the project. And it has a key role to play in South Africa’s energy supply, as project manager countries on the continent, South Africa suffers from energy shortages, which particularly important because it began

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making its contribution to the county’s power grid in 2016.” German technology leader Voith supports many African nations in making the most of their hydropower generation potential with a wide range of small and large projects. Together with its customers, Voith is addressing this opportunity through:

reversible Francis pump-turbines, and then down a 2.5km long tailrace tunnel to the lower reservoir, which is held up by the Lower Bramhoek Dam. The system can begin responding to National Grid power shortages in less than two minutes, and is the fourteenth largest of its kind in the world.

Markus Mueller explains: “Like most

hamper its economic growth. Ingula is

“The system can begin responding to National Grid power shortages in less than two minutes, and is the fourteenth largest of its kind in the world

new state-of-the-art plants, the repair, maintenance and servicing of existing infrastructure and the transfer of knowledge to support African countries in running their hydropower facilities self-sufficiently.

www.voith.com

Energy for South Africa Voith is one of the worldâ&#x20AC;&#x2DC;s leading suppliers of hydroelectric equipment, technology and services. As a full-line supplier, our portfolio of products covers the entire life cycle of new and existing large and small hydropower plants. In Africa, Voith has a long-time experience: We have been successfully executing hydropower projects since the 1940ies. For the pumped storage facility Ingula in South Africa we supplied the complete electromechanical equipment. Now, the power plant helps to significantly stabilize the electricity network of South Africa. We are proud that we have been part of this important project. www.voith.com A Voith and Siemens Company

I n g u l a

The project was designed and built by Eskom, and cost a total of around R35bn (around US$2.4 million). One obstacle during the project’s construction run was its ballooning costs, which spiraled from R8.9bn thanks to contractor inefficiency, corruption and unplanned expenses. Some South African media have laid this overrun at the feet of CMI Joint Venture, an Italian contractor with a reputation for unreliability, but others point to PG Mavundla Engineers, owned by a friend of President Zuma. Costs aside, construction began in 2005 and the plant was planned to come into operation in 2013, but delays and overruns stalled the first power production until 2016. Further problems came when the number three turbine was damaged during synchronization testing, delaying its activation by six months while repairs were made. Eskom’s generation division runs the plant on a commercial basis.

“Other South African sources hailed the project as a solution to the dreaded ‘load shedding’ Saving shed loads

Speaking at the project’s launch, Eskom’s Interim Group Chief Executive Matshela Koko said, “the commercial operation of Unit 3 completes the Ingula pumped storage scheme project. This will

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further strengthen security of power supply to South African homes and businesses. I am thrilled that we are on track to deliver all New Build projects. This achievement would not have been possible without the hard working team at Ingula and strong executive leadership in Eskom.”

South Africa’s power supply problems are still not insignificant, and projects like Ingula are highly situational. They are only helpful as a “booster” in times of high stress, and at other times rely on other forms of power generation or excess power to pump the water back up again.

Other South African sources hailed the project as a solution to the dreaded “load shedding”. This has paralyzed the economy for several years as existing power plants proved unable to keep up with peak demand. Although the Ingula project was extremely expensive and well over budget, its completion sees Eskom in a position of much greater financial stability than when it was started. In a statement to the South African parliament, Eskom’s chair Ben Ngubane described Eskom’s current position as “almost a miracle”, noting that “we have stabilized Eskom coming from a very poor base with a fleet that was faltering. Plant availability is 80% and more, which is almost a miracle, considering where we were a year ago.”

Projects as complex and costly as Ingula are likely to run into issues. However, it is now forming part of a solution to a complex problem, and from a potential disaster an important source of power for South Africa appears to have been salvaged.

“As a result, Eskom’s generation costs have dropped to just R0.09bn in 2016/17, a major saving

The Ingula plant will relieve the load on expensive and environmentally unfriendly open gas cycle turbines and diesel generators, which supported peak time generation during the load shedding crisis. As a result, Eskom’s generation costs have dropped to just R0.09 billion in 2016/17, a major saving.